The Amsterdam court has blocked KLM from starting a new pension fund for its pilots after the airline cancelled its contract for pensions provision with the existing Pensioenfonds voor Vliegend Personeel as of 1 December.

KLM had sought “substitutional approval” from the court, as its works council (OR) “failed to agree in a timely manner” with its plan.

The OR’s support had been KLM’s legal fallback after pilot union VNV refused to approve a new pension fund.

KLM said it was assessing the situation following the court’s decision that substitutional approval would not be possible, as the choice of pension fund had been covered by the collective labour agreement (CAO) between the employer and the unions.

The airline said it would keep making contributions into the pension fund but took pains to emphasise that it would stick with the cancellation of the contract.

The sponsor wanted to establish a new pilot scheme, as union VNV refused to support a downgrade of indexation rights.

KLM, however, insisted on making the adjustment, arguing that the rules of the new financial assessment framework (nFTK), combined with the low-interest environment, would lead to a disproportionately high indexation contribution.

It had suggested that this could jeopardise the company’s operational management.

As a consequence of the VNV’s refusal, the employer cancelled its indexation agreement with the pilot union, as well as the contract with the €8bn pension fund.

The pilot scheme, for its part, announced a legal procedure against KLM, arguing that the sponsor had unilaterally terminated the contract.

The pension fund said it would have to close if an agreement could not be reached.

The VNV previously lodged an appeal against a court ruling that KLM did not have an indexation obligation.

Last month, KLM said the new pension fund would be very similar to the existing one but include indexation clauses drawn on previous legislation.

Meanwhile, the Pensioenfonds voor Vliegend Personeel said it would not support a new pension fund, “as it would not be beneficial to the pilots, who would, for example, no longer be represented on the board or the stakeholders body”.

The VNV, which said it had tried in vain to reach an alternative pension agreement with KLM, said it would prepare for industrial action.

Steven Verhagen, the union’s chairman, said: “We are fed up with KLM’s attempts to economise by tackling a supposed pensions problem.”

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