NETHERLANDS – Bancassurer ING has declined to fund indexation for its pension fund’s 17,055 pensioners and 27,670 deferred participants for the fifth year running.

Its €18.5bn pension plan asked the company to provide a total of €192m for an indexation of 1.98%.

But chairman Jan Hommen said: “ING needs to be very careful with its capital because of the ongoing process of change against a backdrop of very uncertain economic and market conditions, as well as increasing capital and solvency requirements.

“At the same time, we must repay financial support from the government against a considerable premium, divide up our banking and insurance business, reinforce our capital and contribute significantly to the nationalisation of bancassurer SNS Reaal.”

Pointing to the recent announcement that 1,400 staff would be made redundant in the Netherlands, Hommen said it was inevitable that the changes would also hit former employees.

The pension fund, after seeking arbitration over the refused indexation for 2012, was recently awarded 40% of the requested €170m for indexation for its pensioners and deferred participants.

Following a collective labour agreement between ING and its pension fund, the employer must provide funding for indexation for its pensioners and deferred participants annually, regardless of its scheme’s funding.

The pension fund’s board said it was “disappointed” with ING’s decision, adding that it was now consulting with unions and the representative organisation of former ING employees.