Dutch pension funds 'successful' in first multiple-company scheme
NETHERLANDS - The two pension funds of hygiene products manufacturer SCA have successfully merged into the first multi-company scheme in the Netherlands.
The €220m SCA Hygiene Products Netherlands and the €212m scheme 't Anker - with nine affiliated companies - joined forces to better comply with requirements on accountability, efficiency and scale, as well as to better cope with increasing complexity in governance and financial markets.
Within the multi-company scheme, their assets, liabilities and pensions benefits will be ring-fenced.
Co-operation between the two schemes began in 2007 and intensified over time, according to Mathijs van Gool, director. In order to be allowed to file a single annual report for 2010, the funds entered into an official multi-scheme arrangement at the end of the year.
"During the process, we found that it was very important to consider in advance the set-up of the ring-fencing and the arrangements with the asset manager and pension administrator, as well as establishing how to deal with potential problems in the articles of association," he said.
Van Gool added that "proper and transparent" documentation at all stages of the process would be crucial.
"The main challenge now is to secure all synergy advantages of costs and efficiency through new contracts with our service providers," he said.
"We also hope for a decrease of the costs of supervision by regulator De Nederlandsche Bank. Supervisor Authority Financial Markets is already charging lower costs since our pension funds joined forces.
"Although the savings of the multi-scheme are difficult to quantify, it is already clear that they are significant."
According to Van Gool, investment costs have dropped to less than 30 basis points.
The Stichting Pensioenfonds SCA reported returns for its two pension plans of 12.4% and 11.9%, respectively, for 2010 and attributed their outperformance to active management.
At the end of July, the coverage ratio of the participating pension funds was 108% and 111%, respectively.
The pension fund SCA Hygiene Products granted its active participants an indexation of more than 1.5% while increasing the pension benefits of its pensioners and deferred members by 0.2% over 2010.
However, both scheme refrained from inflation compensation for this year.
The multi-scheme has outsourced its asset management, investment administration and fiduciary management to Mn Services.
The pension administration of SCA's 4,880 participants is carried out by Heerlen-based AZL.