NETHERLANDS - Dutch funding ratios have taken a nosedive over the course of June.

The solvency measure - calculated using a three-month average interest rate to discount liabilities as prescribed by the Dutch central bank as of December 2011 - have plummeted by as much as 11.6 percentage points for the month. 

The top five pension schemes will not publish their end-of-month funding rates until mid-July.

A host of smaller schemes, however, have shared the status of their funding levels ahead of their larger peers.

Of the schemes surveyed by IPE sister publication IPNederland, the €1.3bn scheme for the meat and poultry processing and snacks industry, VLEP, reported the lowest funding rate - 78.2% at the end of June, 6 percentage points below the rate at end of May, which stood at 84.1%.

Pensioenfonds Recreatie, the €216m scheme for the leisure and recreation industry - which includes swimming pool and sports facility employees - reported an estimated funding rate of 86.3% at the end of June, down nearly 10 percentage points from the end-of-May rate of 96.1%.

The scheme needs a minimum funding of 104.5% and believes that benefit cuts cannot be avoided.

Next year, the scheme will likely cut benefits by 6.4% and raise the contribution level to at least 20.5%, with further increases "possible".

The €8bn retail industry fund suffered the biggest funding drop as it saw its coverage ratio decrease by 11.6 percentage points in June, from 105.7% to 94.1%.

The pension scheme of state-owned bank ABN Amro, one of the first schemes to introduce dynamic solvency rate management, saw its funding rate decline by 9 percentage points from 116% to 107% at the end of June.

AVH, the €500m farming and food trading scheme, reported a funding of 88% at the end of June, a decline of 5.2 percentage points as compared with its 93.2% rate at the end of May.

The scheme of engineering company Arcadis reported its funding rate on a quarterly basis and ended June with a rate of 88.4%. At the end of March, its funding stood at 91.2%.

The €2.5bn hospitality business scheme saw its funding rate dip by 9 percentage points, from 106% at the end of May to 97% by the end of June.

"The main reason for the decline," it said, "is the low interest rate level of the past few months."

Shipping scheme Nedlloyd's funding slipped from 107.8% to 102.1% over the course of June, prompting the €1.2bn scheme to submit a short-term recovery plan, as its funding has now dipped below the critical threshold of 104.07%.

The notary public scheme SNPF declined by 9.2 percentage points from 98.3% to 89.1% over the course of June.

The Philips pension fund saw its coverage slip from 105% in May to 99% in June, while Shell saw the funding rate for its Dutch scheme decline from 112% to 109% over the same period.

Meanwhile, the pension fund for publisher Wolters Kluwer questioned the Dutch regulator's methodology for figuring the three-month average discount rate, arguing that it had produced an "unrealistically high" funding rate in May, as the average and the actual rate diverged significantly.

Its funding rate, according to the DNB discounting method at the end of May, was 102.5%, while discounting according to the actual market rate would have produced a funding of 93.4%, the scheme said.

The fund said its "official" funding rate declined from 102.5% to 95.3% in June.

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