ABP Introduces Temporary Average Salary For MoD Staff

The Dutch civil service scheme ABP has changed pension arrangements for military staff from final to average salary as of 1 January on a “temporary basis”.

The €418bn pension fund said it had made the change while it was waiting for a “new and sustainable” pension plan to be agreed by trade unions and the Ministry of Defence (MoD).

The move follows contradictory verdicts in two summary proceedings about a permanent transition from final to average salary arrangements. The cases were brought by the trade unions against the employer and the pension fund, respectively.

The unions have demanded that the final salary plan should be continued until a new draft agreement with the employer about average salary arrangements had received the approval of union members.

ABP and the MoD, for their turn, wanted to introduce the average salary plan as of 1 January 2019, with the ministry arguing that the final salary arrangements were too expensive.

ABP has said that its IT system could no longer cope with the current pension scheme for the military and that it no longer wanted to improvise administering the final salary plan.

In the unions’ case against the MoD, the judge decided that the unions had to accept the new average salary plan for this year, following an agreement with the employer made in 2017.

However, in the opinion of the judge handling the unions’ case against ABP, the civil service pension fund could continue to provide a final salary plan for the military staff.

Citing ABP’s provider APG, the judge said that a “pure final salary plan was one of the easiest to implement”.

He concluded that ABP had brought the problems upon itself by not keeping a separate IT system for the MoD staff when it switched to an average salary plan for the 95% of its participants who weren’t military personnel in 2004.

The judge decided that ABP was no longer allowed to communicate that the average salary plan for MoD staff would be introduced as a fact.

Commenting on the verdicts, a spokeswoman for ABP said that, as the social partners hadn’t reached a final agreement, its call centre wouldn’t use the expressions ‘final salary’ and ‘average salary’.

Last week, ABP’s website still referred to the final salary plan for military staff would cease, but the MoD’s website said its personnel were subject to average salary arrangements.