NETHERLANDS - The pension fund of media company Wegener (APW) has revealed its funding has dropped below 105% and is therefore now working on a short-term recovery plan.

A spokesman for the pension fund told IPE "at the end of September, the cover ratio was approximately 103%" however the situation is now likely to be worse - although he was unable to provide the most recent figures -  on the back of a further fall through continuously decreasing markets.

At the end of 2007, the cover ratio of the Wegener scheme was still at over 121 but a long-term recovery plan was already in force by then to shore up the financial buffers to the level required by pension regulator De Nederlandsche Bank, and based on the scheme's specific investment risks.

APW has written to its participants  stating the scheme's board recently decided a planned additional indexation of 0.46% will now not be paid, after initially granting initial compensation for inflationary rises of 0.95% in July.

At present, Wegener pays a pension contributions of 16.1%, while the workers' share is 9.6%.

However, APW has no plan to raise contributions at this stage, as the premium level is fixed at 25.7% until 1 January 2010.

The present terms of the pension fund do not require the parent company to fund any shortfall of the scheme, APW has stated on its website.

But based on the terms of the Pension Act, APW has stopped all value transfers for new and leaving staff for as long as the scheme is underfunded.

APW's assets totalled €750m at the end of 2007, of which 54.2% had been allocated to fixed income. Investments in equity and derivatives were 45% and 0.5% respectively.

The scheme's overall return for 2007 was 2.3%, - this was 2.1% over its benchmark.

To make its funding ratio less dependent on interest rates, the pension fund has hedged 75% of its interest risk by participating in Aegon's long duration overlay fund as of 1 February 2008, according to its annual report.

The scheme has refrained from equity hedging through derivatives because of costs, it pointed out.

APW's pensions are provided by TKP and the scheme has 4,010 active participants, 6,060 deferred members and 1,990 pensioners.