Consolidation roundup: Bank pensions join industry schemes
The €215m Dutch pension fund of General Electric’s Artesia Bank has decided to liquidate and join its parent company’s cross-border pension fund in Belgium.
In a letter to its 1,150 participants and pensioners, the board said that pension rights were scheduled to be transferred into the European scheme during the first quarter of 2017. The bank plans to cease operations in the Netherlands this year.
The pension fund, which had also considered joining a general pension fund (APF) in the Netherlands, said the obligation for the employer to plug funding gaps in the Belgium-based vehicle was the main reason for its choice.
It added that, under Belgian rules, the cross-border scheme also would have better indexation perspectives.
The pension fund said GE wanted to place pensions attached to its European subsidiaries into the single pan-European scheme.
Within the GE European Pension Fund OFP, the assets and pension rights of the participants of the Artesia Bank’s scheme will be kept separately. A dedicated committee will monitor participants’ interests.
GE’s pan-European scheme already accommodates Ireland-based GE Money EMEA.
The pension fund GE Nederland – covering GE’s subsidiaries for healthcare, industry and energy in the Netherlands – was also considering joining the cross-border pension fund, according to the Pensioenfonds GE Artesia Bank.
The pension fund’s coverage ratio stood at 97.7% at January-end. Under Belgian rules, the employer will top up funding to 100%.
As GE’s cross-border scheme doesn’t provide defined contribution arrangements, the participants of Pensioenfonds GE Artesia Bank had been given the opportunity to convert their DC entitlements into DB rights, or place them with an insurer.
In Germany, Barclays Bank’s Frankfurt branch has transferred its pension liabilities to BVV, the German multi-employer pension fund for the country’s financial services industry.
The bank had already been working with BVV on occupational pension provision for several years.
Silvia Schmitten-Walgenbach, chief operating officer for Germany at Barclays, said the transfer of the pension liabilities meant the bank had achieved its goals with respect to occupational pensions. She said the focus was on “an efficient, balance sheet-neutral and simultaneously competitive” pension provision system that helps the bank retain or attract key staff.
The Frankfurt branch’s liabilities were transferred with effect of 1 January.
The move follows a record year for the outsourcing of pension obligations to BVV in 2016 as companies move from the German Direktzusage model of paying pensions directly from their balance sheets to having this done by a pension fund.
The Barclays’ group main pension scheme is its UK Retirement Fund (UKRF). Reporting its 2016 results last week, the bank said this had a deficit of £30m (€34.8bn) as at 31 December 2016. This is down from a £3.6bn funding deficit calculated as at 30 September 2013 in connection with the last triennial funding valuation.
A new valuation is underway. The bank said that contribution requirements, including any deficit recovery plans, are expected to be agreed between it and trustees by the end of 2017.
In a call with analysts last week the bank sought to reassure investors that the outcome of these negotiations would not derail its capital building plans.