NETHERLANDS – Drinks maker Heineken says that additional provisions of 13 million euros per year for the next four years will have to be made to its 1.2 billion euro Dutch pension fund.
The additional provisions are the result of a decreased coverage ratio of obligations of the Heineken pension fund in the Netherlands as of December 31, 2002, and the additional funding will result in a funding ratio of 105% as required by the Dutch pensions and insurance supervisory authority, PVK, said Heineken.
The sum of 13 million euros is an estimate, and the exact amount needed to be injected will depend on developments within the capital market, says the firm.
Heineken is still maintaining a profit forecast for 2002 despite the higher pension costs, which are chargeable to the operating results of the year 2002. Net profit for the period is forecast to have increased by 11%.
The additional provisions will be funded by the proceeds of a subordinated loan of around 150 million euros in September 2003.
Heineken also estimates that premiums to be paid to the Dutch pension fund will increase by 16 million euros in 2003.
In a report in October last year, Dexia named Heineken alongside ABN AMRO, Ahold and Philips as having an underfunded pension fund when measured against the PVK’s new requirements. Dexia suggested that Dutch companies could end up having to add 15 billion euros a year into their pension schemes in order to meet the guidelines set out by PVK.
Dutch pension fund bodies have criticised the PVK’s cover ratio proposals, calling them bad for the economy and corporate profits.