NETHERLANDS - Dairy company Friesland Foods has contracted out the pension claims of 16,000 pensioners and deferred members to insurer Delta Lloyd.
According to consultancy Towers Perrin, which assisted Friesland Foods in setting up the €800m buyout deal, former staff of the firm will get a better indexation under the new scheme arrangement.
This transfer has been triggered by the accounting rules of IFRS, which prescribe pensions are accounted for on a company's balance sheet, indicated Andre Boudewijns, chief financial officer at Friesland Foods.
"We have searched for a solution that offers maximum security and indexation to deferred members and pensioners who left before 2006, while minimising the effects of the pensions valuation on the company," he said.
"The main feature of the scheme is that pensions are placed with an insurer, so Friesland Foods is relieved of any liability for any shortfall of the scheme, but will never be able to profit from a financial surplus of the scheme either," Ronald Doornbos, partner at Towers Perrin, explained.
"By paying a one-off purchase price, the nominal claims as well as the indexation are fully paid for by Friesland Foods. Part of the transaction is a one-off bonus of 1%," he added
According to Doornbos, who declined the elaborate on the details, the indexation is unconditional and better than in the previous scheme. "The former staff get a very good deal, " he stressed.
Similar deals have been done elsewhere in the Netherlands in recent months, most notably the transfer of the Optas' pension fund to Aegon in March, which is now causing controversy over the use of pension fund assets. (See earlier IPE story: Optas art deal ‘morally contemptible' - Borgdorff)