ICK, a new industry-wide fund for the technology, telecommunications and office suppliers sector, is one of the newest pension funds in the Netherlands.
The fund is now just emerging from the protracted process of transforming itself into a fully funded old-age pension scheme. But though the path has been a long one, the new fund foresees a future where its retirement provision umbrella
could reach beyond current sectoral limits.
The new fund has grown out of the existing VUT scheme – a pre-pension scheme covering early retirement in the sector. But the Dutch government now requires this type of VUT scheme to be wound up, and it is in compliance with this that the new scheme has come into being.
The government has signalled its intention of eliminating pre-pension schemes, which allow for retirement before the age of 65. Over the next few years, these schemes will cease to be tax-deductible.
Up to now, employees in the technology, telecommunications and office supply sector have been able to participate in another industry-wide scheme – the metalworkers scheme. But although some workers have taken this route, only a small proportion of staff in the IT and telecoms industry did so, says Hans Keukelaar, chairman of ICK.
The metalworkers fund is a large one, he says, but the IT sector wanted to have its own pension fund with its own policies. ICK currently has 8,000 members, and is still nowhere near its maximum capacity. If employees from all the companies in the sector were to join, membership would swell to 40,000. However, some of these companies are large ones that have their own pension funds, says Keukelaar.
At the moment, membership of ICK is voluntary for workers in the sector. “But that will change,” says Keukelaar. “If you are a member of our industry sector and you don’t want to join our scheme, you will have to have permission from us.”
If employees choose to take this opt-out, ICK will check that the pension arrangements made as an alternative really are equivalent, he says.
In the future, the fund might take in employees from other sectors. “It is possible that the government will give us permission to become applicable for companies that are not part of
our area – that is at the stage of
getting approval at the moment,” says Keukelaar.
The procedure is currently under way to make the fund mandatory. The Ministry of Social Affairs and the Insurance Chamber – which is part of the Netherlands Bank, which regulates pension funds – are now at work on this. Keukelaar says final approval
is expected to come either at the beginning of November or December.
Negotiations with trade unions have resulted in the basic arrangement of the ICK pension scheme. Under the agreed terms, pension rights are built up between the ages of 21 and 61, and the contribution level has been set at 1.75% of pensionable salary. The rate is only applicable for the base salary, which excludes social contributions.
“This is part of the collective labour agreement,” says Keukelaar. It has been the result of a year and a half of negotiations. The process has been quite protracted, he says, and it has not been easy. Complications have arisen because intermediate arrangements have had to be made in parallel with the new pension scheme being set up. People in the old VUT scheme have to keep their rights, and a means has been found for them to do so.
The old VUT scheme has been a pay-as-you-go arrangement, but the new ICK is fully funded. It has been made possible for the new fund to pay existing members. “That was important… and also that the current members will not have to pay too much,” says Keukelaar. The new premium is very reasonable, he says.
Even though the VUT scheme was run on a PAYG basis, fortunately there was enough unutilised capital in it to start up the new fund. Also, it has now become the case that any members leaving the industry ahead of retirement will not be able to recoup their contributions. This sacrifice has been necessary to help make the new funded scheme possible.
Keukelaar says relatively few difficulties were encountered in setting up the fund. However, the transfer arrangements were complex and required substantial actuarial calculations to get the amounts right.
“There is a whole list of requirement from the Insurance Chamber when a pension fund has to make such arrangements and a heavy burden of regulation,” he says. A lot of information was required, he says. But this is all necessary, considering the number of people involved and the large amount of money at stake. It is wise to take this much care, he says.
“In the past, we have learned from funds that have gone bankrupt, where nobody has ended up getting their money,” says Keukelaar. This may be 40-odd years ago, he says, but it is still right to be cautious.
The ICK scheme is run on a defined benefit basis, and investments will be managed externally by ING Investment Management in The Hague. Most of the fund’s assets – currently about E40m – have already been invested, and the strategic asset allocation is 70% to bonds and 30% to equities.
The response among scheme members to the way the new fund has been set up has been mixed. “Some are very happy with it and some are not – but that is always the case,” says Keukelaar. “Our preference was to keep the VUT… but we had no choice.”
The IT and telecoms industry is, in its current form at least, a relatively young industry, and because of this and the many entrepreneurs within it, some say it is often difficult to make arrangements that cover the whole sector.
Keukelaar agrees that it is a rather young industry, although he himself has worked for 30 years in IT and 10 in telecommunications. “Most of the companies are not very big, and
the new companies want to make
their own decisions – they like to
be independent,” he says. But this
does not hold true for all of them. “Others say, please make the arrangements for us.”
This does sometimes make things complicated, he says, and necessitates a high degree of organisation. In the IT industry, trade union membership is low, at between 5% and 10%.

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