NETHERLANDS - The €22bn metal scheme PME is among the 14 pension funds likely to cut their pension rights and benefits following an announcement by Dutch social affairs minister Piet Hein Donner.

In a statement, it said: "Pension regulator De Nederlandsche Bank has announced it wants to speak to PME whether additional measures are already necessary on 1 January 2011."

However, PME argued that its recovery at July-end was still in line with its recovery plan, adding that it failed to see the necessity of a pension discount now.

Scheme officials said they would prefer alternative measures.

PME's spokesman said: "We could, for example, look at further adjusting our investment policy and further improving our risk management."

The scheme has already raised its contributions to the maximum level of 23%, and refrained from granting indexation.

It has attributed its low coverage ratio solely to the volatile long-term interest rates pension funds must apply for accounting their liabilities.

"The rates dropped from 3.12% to 2.82% in the second week of August, causing the coverage ratio to drop from 96% to 93%," it saidon its website, concluding that "the day's rate shouldn't be the reason for drastic measures".

The PME spokesman added: "As our financial position has improved to the same level as before the financial crisis, we have not been reduced to beggary.

"It's therefore strange that, despite our long-term horizon, we must act upon the historically low rates of today."

In its initial five-years recovery plan, the metal scheme had already indicated a rights cut of between 0.10% and 4.14% might be necessary if its coverage ratio was less than 99.3% at the end of 2012.

The scheme had 148,000 pensioners, 146,000 active participants and 325,000 deferred members at the end of 2009.

Meanwhile, the €35bn metal scheme PMT, which had a coverage ratio of 94% at the end of July, insisted it was not on the list of affected pension funds.

Annemieke Biesheuvel, spokeswoman for PMT, said: "Contrary to PME, we haven't already factored in a rights cut in our recovery plan.

"Moreover, we are still gradually increasing our contributions as an alternative to cuts."

Elsewhere, in an open letter in daily De Volkskrant, Dick Sluijmers, chief executive of the €250bn pension provider APG, said the mandatory application of current interest rates for accounting liabilities failed to provide an accurate picture of pension funds' financial situation.

He called for replacing the criterion of daily interest rates by an average rate, or even a fixed rated as pension funds applied in the past.

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