NETHERLANDS - Industry-wide pension fund ABP may postpone its decision on indexation as a result of turbulence in the financial markets, and the Labour Foundation (STAR) has called on pension fund boards to do the same.

ABP, the €212bn giant civil service scheme, is following the advice of Dutch pensions regulator the regulator De Nederlandsche Bank and taking ample time for the necessary deliberations, and stated it will now only determine next week when it can make a indexation decision.

The pension fund usually decides in November what compensation should be paid to members to meet inflation, and this decision is based on figures from the end of the third quarter.

Similarly, Ruud Hagendijk, chairman of Mn Services, yesterday suggested the €60bn pensions provider and asset manager of the metal industry may also postpone its decision on indexation.

Labour Foundation The Star - made up by the representative organisations of employees and employers - has targeted its call for other pension fund boards to delay their indexation decisions at schemes to which the cover ratio at the end of September is decisive for indexation.

The Labour Foundation said following consultation with the government it had taken into account the DNB's announcement concerning a tailor-made approach to individual pension funds, and noted the regulator has also made it clear the financial assessment framework FTK does not automatically prescribe divestment when a scheme's cover ratio decreases significantly, nor does it expect schemes to raise contributions or lower indexation.

On the back of its activity, representatives of the pensions sector have welcomed the Star's recommendation.

"The advice is sensible, because we need stability first. The present conditions are too volatile to make sound decisions," commented Frans Prins, director of the Foundation for Company Pension Funds (OPF).

"However, we must be prepared to face reality sooner or later," he stressed.

The Association of Industry-wide Pension Funds (VB) is also supporting the Star's recommendation as Gerard Rieman, VB's director, pointed out "the present markets do not reflect the true value of pension funds' portfolios".

"Postponement of any decision on indexation is expedient at the moment. The situation is so unclear that things can change on a daily basis," suggested Wichert Hoekert of consultancy Watson Wyatt, noting there is no guarantee future conditions will be any better.

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