ING and Dutch trade unions today announced they have finalised plans for a new pension scheme for the firm's employees in the Netherlands.

The new pension scheme will take effect on 1 January 2014 following acceptance by both the unions and their members, and will apply to the 27,000 staff members of ING Bank and ING Investment Management (IM).

The new agreement will see the creation of two new and separate pension funds, one for the banking branch and one for its investment arm.

The new defined contribution (DC) offering will replace the current defined benefit (DB) plan which will stop accruing new pension benefits.

Changing to a new DC scheme will offer ING a one-off after-tax gain of approximately €300m, money that was initially kept to cover estimated future liabilities in the current plan.

According to data held by Pension Funds Online, the current scheme held assets worth €16bn at the end of 2011.

The key elements of the new scheme are as follows:

- ING contributes a yearly pre-defined premium to the funds. The employee contribution to the new scheme will gradually increase to one-   third of the base pension premium

- The minimum salary level at which pensions are provided will be lowered to €15,000.

- Pension benefit will be based on average wage over period of employment with a 2% annual accrual rate.

- The pension funds, not ING, will bear responsibility for funding adequacy; ING Bank and - IM are to pay an additional risk premium.

- Responsibility for inflation indexation will move to the new funds.

- Standard retirement age will be raised to 67.

First published 03.07.2012

azeevalkink@wilmington.co.uk