New pension design for Philips
EUROPE - Dutch electronics major Philips is rolling out a new hybrid pension design for non-executive workers in the UK and Germany.
The move follows last year's launch of a new pension design for Philips executives in the Netherlands.
Jan Snippe, head of corporate pensions at the €14bn Philips pension fund in Amsterdam, told IPE the new hybrid plan moves away from defined benefit (DB), which according to the company does not deal with risk in an efficient way, but also aims to limit the risks of defined contribution (DC).
"Until January 1 2006 we had a DB scheme and for various reasons we wanted something else," said Snippe.
"We believe that you can find possibilities in the financial markets to protect participants against various insecurities of DC," he added.
The new scheme, which will be rolled out in the UK and Germany over the next coming months, invests mainly in index-linked instruments.
However, there are three options which deliver various levels of "free space" to take on more risk, Snippe said. He declined to be more specific.
"You shouldn't ask participants how they want to invest, but rather which pension level they hope to receive," he argued.