The €112m Dutch pension fund of SC Johnson has announced it will liquidate itself over the course of next year, when it intends to transfer its two pension plans to an insurer.
In its newsletter, the pension fund for the manufacturer of household cleaning products said it postponed its initial plan to liquidate on 1 January, as its sponsor asked for more time to assess the consequences of the decision.
The pension fund said the players involved wanted full clarity about each of their roles, to achieve maximum support when the scheme is no longer implementing its fully re-insured pension plans with Aegon and Zwitserleven, respectively.
It added that the employer would pay any surplus costs caused by the delay.
Fred Eindhoven, the scheme’s chairman, said the pension fund intended to transfer its pension plans to an insurer.
In 2006, the pension fund paid Aegon a lump sum for the liabilities of all pensioners and deferred participants, with the insurer annually adding the net surplus returns of more than 4%, according to the scheme’s annual report.
At the same time, the pension fund placed pensions accrual for its workers in a defined contribution plan with Zwitserleven.
The contract, which expires at year-end, provides for at least a pension-asset growth of 3%.
In its newsletter, the scheme’s board explained that the Zwitserleven contract offered hardly any chance of surplus returns or indexation, following the insurer’s decision in 2011 to fully re-allocate its investments to low-risk assets.
“As a result of low interest rates, annuities at retirement will be much lower than in the past,” warned Eindhoven.
He pointed out that the results of the Aegon scheme were much better, and even had the potential of inflation compensation.
Last year, however, the pension fund had to come to a compromise with Aegon, which wanted to reduce the tariffs for future indexation unilaterally, according to the chairman.
The Pensioenfonds SC Johnson has 940 participants and pensioners.