NETHERLANDS - Financial consultant KPMG has contracted insurer Aegon to manage its pension scheme and, at the same time, has changed its arrangements for active participants from defined benefit to defined contributions.
"We have been looking for a modern scheme which fits better within our employment conditions, offers our employees more individual freedom of choice and is competitive," explained Gert van Essen, board member of KPMG.
"At the same time, we wanted to increase the predictability and manageability of our pension costs," he added.
According to Van Essen, the new scheme uses the maximum fiscal limits, such as the lowest possible franchise, as this allows participants to build up a larger pension.
The franchise is the part of the salary over which participants do not build up a pension and is designed to anticipate the benefits of the future state pension AOW.
Van Essen said KPMG has found in Aegon an excellent provider to meet its low cost requirement, so KPMG can pay the full pension contribution for the 3,500 employees who participate in an average salary scheme.
"Under the new arrangements with Aegon, KPMG's workers have the option of a pensions investment or guaranteed benefits," said Falco Valkenburg, partner at Towers Perrin, whose firm advised KPMG on the new scheme and its implementation.
Erik van Houwelingen, a member of Aegon Netherlands' executive board, commented "there is a lot of demand from the market for innovative pension solutions so the challenge is to offer tailor-made arrangements against a very sharp price".
In his opinion, KMPG's employees will gain access to "excellent arrangements with greater flexibility" as a result of the new DC plan, while the company gets to keep the volatility of its pension scheme off its balance sheet.
KPMG has already paid its employees' contribution in full, which amounts to €15m a year, according to Aegon.
A KPMG spokesman also said officials at the €450m Stichting KPMG Pensioenfonds have decided to liquidate the scheme and are at present negotiating with an insurer to manage a contributions-free scheme for pensioners and deferred members of the closed DB arrangements.
The Stichting KPMG Pensioenfonds assets had been managed by Fortis and Legal & General, but the scheme's administration will now move to Aegon, said the spokesman.
This new contract has come into force retrospectively from January 1 2008.