NETHERLANDS - VB, the organisation for Dutch industry-wide pension funds, has warned many of its members are worried they will not be able to index the pensions of its members in the coming months.

"The way it looks now, at least some of the funds will not be able to index fully or at all," a VB spokesman told IPE.

He added pension funds will take a decision on their individual indexation - the inflation correction which pension funds aim to implement ever year -  this autumn.

But pension funds have been hit by the current financial crisis and the Dutch pension regulator DNB warned yesterday an inflation shock could affect the financial position of the pension funds as well as the spending power of their participants, while negatively impacting the indexation ambitions of pension funds.

During the presentation of the Dutch budget earlier this week,the government predicted inflation would be above 3% in 2009.

If pension funds therefore do not 'index', the spending power of their participants could decrease by as much as 3% as well.

The DNB also said it is in talks with a number of pension funds whose cover ratio have dropped below 105% - these funds have handed in a recovery plan devising how to eliminate the shortfall within three years.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com