Sigaren, the €198m Dutch pension fund for the cigar industry, wants to join Landbouw, the €14bn sector scheme for agriculture next year.
In its annual report for 2015, the board said it had accepted the wish of employers and workers to merge with a larger pension fund, after it had already concluded that such a step would be desirable.
It cited rising costs following the increased complexity of pensions as well as the necessity to hire external experts to assist the small scheme.
Sigaren has 665 active participants, 3,800 deferred members and 2,100 pensioners, affiliated with 12 employers.
With a funding of 112%, the pension fund is financially in a relatively good shape, in part thanks to its 90% hedge of its liabilities.
Funding at Landbouw, which has hedged only 40% of its liabilities, stood at 90% at July-end.
The pension funds said that they were still assessing how to bridge their funding difference.
After the merger, the pension arrangements of Landbouw are to apply to Sigaren’s participants.
Landbouw offers an annual pensions accrual of 1.875% with a premium of 21.7%, whereas Sigaren charges 19% for an accrual of 1.75%.
Costs at Landbouw, however, are much lower, with 0.38% for asset management and €109 for administration per participant, against 0.7% and €384, respectively, at Sigaren.
Both schemes have outsourced asset management and pensions provision to Achmea.
Last year, Landbouw took in four pension funds – the sector scheme for the vegetables and fruit processing industry and the company schemes Heinz, Dairy Trading and Givaudan – with combined assets of €880m.
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