NETHERLANDS - Supermarket chain Super de Boer is lending its ailing pension fund €10m to resolve a dispute with pension officials about the scheme's recovery plan.

The 12-year interest-free loan should enable the €400m SdB pension fund to increase its cover ratio to the required regulatory minimum of 105% within five years, after its cover ratio dropped to 86% at the end of March.

The parent company and pension fund officials stressed in a joint statement that the "balanced" agreement has been reached without any reduction of pensions or pension rights for the scheme's 21,600 participants.

That said, both players have so far declined to provide details about the new contract, which will also stay in place after 1 January 2010.

Super de Boer had announced earlier this year that it would withdraw its support from the pension fund from 1 January 2010, unless more favourable terms for the company could be agreed, because it was not happy with the proposed funding of the recovery plan. (See earlier IPE story: Sponsor threatens pension withdrawal at LDI pioneer)

Union officials claim the supermarket chain had previously refused to contribute an additional sum of €25m, as asked for by the pension fund, and had insisted there should be a pension rights reduction.

Following this latest agreement, Henk Casteleijns, chairman of the pension fund, commented: "We are satisfied with this agreement, which fits within our balanced approach and our long-term views."

The SdB fund was effectively the pioneer of liability-driven investments (LDI) in pensions, when it introduced the concept in 2005.

However, this strategy was also its downfall in 2008 as interest rates fell further than fixed income investments could compensate for, and investments in the scheme's returns portfolio took a negative turn.

The administration of the pension fund has been outsourced to Aegon subsidiary TKP since 1 January 2009. The SdB scheme has 5,000 active participants, 15,000 deferred members and 1,600 pensioners.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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