ReisWerk Pensioenen, the €300m Dutch pension fund for the travel sector, is looking for a merger with a larger industry-wide scheme or a switch to defined contribution (DC).
The fund has a coverage ratio of 99.5 per cent and a predominantly young membership, which means continuing independently is not an option. The long duration as a consequence of its young membership requires taking more investment risk, but the financial assessment framework does not allow for that because of the fund’s deficit.
Since the introduction of the new ultimate forward rate (UFR) in 2015, the fund’s funding level has fallen from 125 per cent in 2014 to the current 99.5 per cent.
The pension fund said it was unable to hedge against the impact of the new UFR, which has caused a sharp increase of its long-term liabilities. The UFR is expected to drop further, and the current asset allocation would not be able to solve the scheme’s financial problems.
By joining another industry-wide scheme or switching to DC, ReisWerk would be able to increase the risk profile of its investments.
The social partners in the travel industry aim to make a decision about the scheme’s future next summer.
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