Nestlé will not transfer its Dutch pension fund into a Belgian cross-border vehicle, following the refusal of its workers’ council (OR) to approve the employer’s plan.
In its annual report, the Swiss food company’s Belgian fund Nestlé Europees Pensioenfonds (NEPF) indicated that governance and the structure of the Belgian vehicle, an organisation for financing pensions (OFP), played a role in the rejection.
It said that it would focus on both issues before it would resume its cross-border activities.
However, the annual report of Nestlé’s Dutch pension fund, Alliance, did not shed any light on the objections of its OR. The company declined to provide further details.
The annual reports made clear that, with a funding of 113.8% at June-end, Alliance was financially in a better shape than its Belgian sister scheme.
The latter’s coverage was 109% at the end of 2014, but is drawn from a discount rate of no less than 5%. The Dutch ultimate forward rate was last month lowered from 4.2% to 3.3% by regulator De Nederlandsche Bank, which triggered a decline in coverage ratios.
The Dutch pension fund and the employer have together been looking at the options – including the effect on contribution and indexation – of joining the NEPF since 2012.
The fund itself has been preparing to act as a cross-border vehicle since as early as 2008, a fact that was revealed after then-Belgian finance minister Didier Reynders erroneously announced that assets would be pooled in an OFP.
The annual reports said that the OR objected to Alliance’s decision to the transfer of pension rights in 2012, and that it officially rejected the move last year.
“This made clear that the planned transfer to the NEPF will not happen,” the fund’s report saod.
Currently, the OR of Aon is fighting in court the decision of the employer to move its pension plan to Belgium, in a case focussing on the scope of the OR’s right of approval.
The OR of Aon Hewitt previously said that it is worried about the “quality of the pensions system in Belgium”.
At pharmaceutical company Bristol-Myers Squibb, the OR succesfully prevented that its Dutch pension fund was moved across the border in 2012, as it was afraid that solvency requirements in Belgium were not sufficient.
With assets of €564m and almost 5,200 participants at year-end, Alliance is much larger than its European counterpart in Belgium, which had €150m of assets and 2,500 participants.
Alliance has invested 37.5% of assets in equity and 37.5% in fixed income. The NEPF’s portfolio consisted of 45% stock and 35% bonds.
