NETHERLANDS - Instead of the initially announced rise to 18.2%, health care scheme PGGM will lower its contributions for 2006 by 0.05% to 16.15%, it said.

The €69bn scheme also decided on an indexation of 0.36% of the salary rise, which has been 0.75% in the sector.

According to PGGM, the contributions’ decrease is due to higher returns, the new flexible pensions scheme and the disappearance of the prepension contributions.

Executive chairman Karel Noordzij atttributed the results to PGGM’s new financial set-up, based on the new financial assessment framework, or FTK. “We are ready for the new Pensions Bill, and we will apply the FTK already in 2006”, he said.

Accounting according the FTK will become mandatory in 2007. The FTK rules only allow full indexation if a scheme’s coverage ratio is 130%. PGGM funding ratio is 117% at present.

Meanwhile, SPF Beheer, which implements the schemes of the pension funds of the Dutch railways and public transport, is also expecting a decrease in contributions, “probably quite similar to the cuts at ABP,” spokeswoman Mireille van Vught said.

“SPF’s cuts are not only due to the FTK, but also to the effects of the international pension accounting standards of IAS19,” she added. The board will take a decision this week. SPF Beheer has assets under management of €12bn and represents 90 employers and 100,000 workers in total.

Elsewhere, the €16bn industry-wide pension fund for the metal and electro-technical engineering industry Metalektro, or PME, won’t follow ABP and PGGM’s example, spokesman Bram van Els indicated.

“The contributions percentage can go down by 2% to 23%, because we will raise the pensionable salary. But it isn’t a real cut for the members.”

“As long as we don’t index fully, we don’t want a decrease in contributions. PME’s indexation for 2006 will be 80%,” he added.

Last week ABP, the largest Dutch pension fund, announced a drop in pension contributions by 2.2% to 15.5%. The decrease is due to the FTK, which ABP has already implemented for 2006, it said. The major requirement of the FTK is that pension contributions are cost-effective.