BELGIUM – Fortis Bank is increasing employee contributions to its final salary pension schemes and cutting the weighting in equities rather than moving to an average-salary or closing to new members, despite a near doubling in costs in two years.
In its annual accounts for 2003, Fortis said its defined benefit pension plans, which cover virtually all its employees around the world, cost €347.5m last year, compared to €196.8m in 2001. About half of the increase, €61.4m, was due to wage increases and people joining the schemes while another €59.7m charge came from amortization of bad investment results. The expected return from the plan assets also fell from €302.8m in 2001 to €277.6m in 2003 as the percentage forecasted return fell from a 5.4-9% range to 4-8.25%. Fortis has reduced its equity weighting in its pension fund by 1% to 2%, the company said.
Fortis has benefit obligations of €6,551.9m at the end of 2003 and a fair value of plan assets of €5,741.9m. Hendrik Jan Eijpe, spokesman at Fortis, however, said there were no plans to close the plan currently. “There are no plans to close the defined benefit plans or move to an average wage, although the final salary pension scheme is always something we negotiate with the unions. Bad investment results in financial sector companies meant we negotiated worker contributions last year, along with other firms, such as Rabobank.”
Entrants after December 2003 to the Dutch DB pension fund had their contribution rates set at 6.67%, with existing members levies to rise to that level over a number of years, Jan Eijpe added.