SPUN, the €485m Dutch pension fund of IT firm Unisys, has announced its intention to liquidate after placing the largest part of its assets with a general pension fund (APF).
It will transfer the remainder of its assets to a low-cost defined contribution (DC) vehicle – known as PPI – where future pensions accrual is to take place for all its participants.
Geert Bierlaagh, the pension fund’s director, said that negotiations with the APF had not been completed yet so he couldn’t provide more details.
The Unisys scheme operates two pension plans: a hybrid of both defined benefit (DB) and individual DC for staff that had been employed before 1 September 2012, and an individual DC scheme for workers that joined after that date.
It said the former section would be transferred to a full individual DC, while the latter would remain unchanged.
According to Bierlaagh, tthe €480m of accrued DB rights would be transferred to the APF and housed in an individual section.
The remaining €5m of individual DC capital is to be transferred to the PPI. Bierlaagh said he couldn’t provide details of this section either, “as this had been arranged by the employer”. Unisys could not be contacted by the time of publication.
Bierlaagh said the employer and the pension fund had agreed that SPUN would become a closed scheme as of 1 July, and accrual into the PPI would begin as of this date.
He added that SPUN aimed to complete the transfer to the APF before 1 January.
Currently, asset management for SPUN’s DB plan is carried out by MN, while NN Investment Partners is the asset manager for its DC commitments. Syntrus Achmea Pensioenbeheer is the fund’s administration provider.
Clarifying its decision to liquidate, the board said that, as a consequence of further ageing of its population and the lack of newcomers, it expected to generate insufficient returns in the future to afford rising costs of the increasing number of pensioners.
It argued that, despite last year’s investment return of 9.5%, its financial set up had become “too vulnerable”. It also raised concerns over whether it would be able to keep finding qualified board members.
At year-end, the Unisys scheme had 2,670 participants in total, of whom 1,310 were pensioners and 244 were employees. Last May, the scheme’s funding stood at 105.7%.
Because of the relatively high number of older participants and pensioners, SPUN already followed a defensive investment policy, which comes at the expense of pensions accrual for its younger participants.
In 2015, its annual premium income was just 1% of its assets. Administration costs per participant rose to €544 last year.
SPUN said the employer had provided a budget to cover administration costs for the next six months, after which time the closed pension fund would not receive any further contributions.
The scheme’s accountability body (VO) has already advised positively about the planned transition.