NETHERLANDS - Dutch telecom company Royal KPN said its pension funding decreased to 96% at the end of the third quarter in 2011, down 12 percentage points from the previous quarter.
The funded status was down seven percentage points from this time last year because of falling interest rates and unstable financial markets.
KPN set a plan in place in 2009 on how to return the coverage ratio to the minimum required level of 105% as set by the Dutch Central Bank, and officials said the company is still in line with its recover plan despite the recent drop. Under the plan, KPN will pay the pension fund €390m ($543m) by 2013.
Previously, the company paid €80m in 2010 and €30m in 2011. KPN will make an additional cash payment of €21m in the first quarter of 2012 as a result of its decreased funded status.The firm made no recovery payment in Q3 and Q4 as the funding ratio was above 105% for the first half of 2011.
The fund said it will not need to reduce its fund members' benefits in order to maintain its recovery plan, nor will accrued benefits of active participants and former participants be affected.
KPN's revenues were down 3.4% year-on-year at the end of the third quarter coming in at €3.5m, down €115m from last year's value. The firm said this was due to restructuring costs totalling €78m, decreasing sales and regulatory cuts.
KPN spokesperson Stefan Simons said: "The charge for restructure has mainly affected our profit but sales were also down as consumers are increasingly using social media such as facebook and apps. Additionally, mobile tariffs set by the regulatory board have also decreased which has also affected sales."
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