NETHERLANDS - Dutch telco KPN will pump €390m (US$527.6m) into its pension fund over the next four years in a bid to restore solvency under the terms of its recovery plan.
Should the fund return to solvency before this time, KPN said it would reduce or halt these payments.
The firm's annual report showed its solvency ratio had fallen from approximately 137% at the end of 2007 to 94% at the end of 2008.
In a statement, the company said there would be "no need to cut pensioners' actual pension payments" during the recovery period and accrued member benefits would not be put at risk.
However, should the economy worsen over the next few years and the fund not reach its required solvency targets by 2013, KPN said it would not make any extra contributions "over and above the annual pension premiums" and could look to other measures to cut costs, which would put pension payments and accrued benefits at jeopardy.
Getronics, a subsidiary of KPN, will also receive and extra €12.5m in pension premiums a year between 2010 and 2013 in a bid to return the fund to solvency.
Under the rules of the Dutch pension regulator, De Nederlandsche Bank, all pension funds with a funding ratio of below 105% had to submit a recovery plan by 1 April 2009, detailing how the scheme would return to the minimum required solvency level within five years and to at least 120% solvency within 15.
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