Civil service pension fund ABP is threatening to withdraw its support for the recently agreed pay deal for 600,000 civil servants.

The deal includes a commitment to lower pension premiums, effectively boosting take-home pay by 2.2%. But the fund says it cannot cut premiums without threatening pension levels, the Volkskrant says on Wednesday.

The deal was signed between the government and smaller unions in July and includes a 5% pay increase over two years and a one-off bonus payment of €500.

However, the pay rise is made up of a 2.8% increase in actual earnings plus the cut in pension premiums. Premiums are not determined by the government but by the pension fund.

The giant FNV trade union federation, which represents 56% of all civil servants, pulled out of the pay talks and has since gone to court to try to have the deal annulled.

The Volkskrant points out that pension funds have to comply with rules sent down by the central bank and that the ABP does not have a free hand to set premiums at a lower level. If it does cut premiums, pensions will also be lower, the paper points out.

The fund has 2.8 million members and is one of the biggest pension funds in the world. It has until Monday to take a final decision on how to deal with the premium cut.

If the pension fund refuses to cut premiums, which the Volkskrant says is likely, the government will have to come up with a further pay rise.