NETHERLANDS - The Gist-Brocades and DSM-Chemie pension funds are to merge, creating a fund worth more than €5bn.
The €850m Gist-Brocades scheme PGB - a subsidiary of chemicals group DSM - will merge into the much larger pension fund of DSM, also known as PDC.
The new €5.05bn scheme will be named Pensioenfonds DSM Nederland, or PDN, the schemes said in a joint statement.
“The reasons for the merger are better risk management, increased returns and reduced costs by increased efficiency. Moreover, the new large scheme will be better able to deal with the principles of pension fund governance,” they added.
The new pension fund is to continue as a defined contribution scheme. DSM was the first listed Dutch company to shift the investment risks of its pension funds to its employees, as of January 2006. However it decided to raise its fixed contribution from 12% to 21% during the next five years.
“If the merger gets the go-ahead, DSM will pay-in a one-off contribution of €91m, in order level the coverage ratios of both schemes,” the schemes said.
At present, the funding ratios of PDC and PGB are 142% and 129% respectively.
PDC’s members total almost 30,200, while PGB has 5,250 members.
A decision on the merger is expected to be taken in September. The new scheme is scheduled to start operating as of January 1 2007.