BELGIUM - Phillip Neyt, director general of the e2.5bn Belgacom pension scheme – the hybrid first/second pillar fund for the countries telecom provider, has been appointed chairman of a new Treasury Council, set up within the Belgacom group to harmonise the relationship between the company and its pension funds and exploit any potential business upside.
Neyt says the new council will meet weekly to discuss strategy and new products and financial vehicles – not only for Belgacom but for the group as a whole – including Belgian mobile phone arm Proximus and the group’s Dutch subsidiaries.
Members of the council, he says, will include Belgacom’s CFO, the general manager of M&A, global business development managers and company treasury executive.
“ What we do already at this level is treasury cash pooling, but what we will be discuss are the bigger issues, while also looking at the relationships we have with our banks and review these.
“ It should create opportunities and we will become more closely linked to the company than we already are. On the financial side we simply will have a more global view.”
Neyt, who retains his present pension fund position, notes that while the fund is legally separate from the company, economically he always feels it is integrated: “ The more return we have the less money the company has put in.
“ For this reason we are quite close and have done a lot of ALM studies.”
He adds that the council will also have a specialist who will translate the risk elements of the pension fund into the corporate equation, such as whether any shortfalls affect the company’s profit and loss account.
“ We have index linked liabilities and when we do an ALM he will look at what the impact of inflation will be on the liabilities and how the company revenue will react to inflation.
“ I see a lot of pension funds who behave very independently from the company – you see it in the Netherlands, and there are some in Holland which are around 200% funded.
“ It can’t be the objective of a company to put too much money in the pension fund either.”
The council will discuss both potential downside and upsides of the relationship: “We try to manage the pension fund as a profit centre but we don’t want the prime objective of the company to be putting money into the pension fund,” says Neyt.
“ What we will do is integrate all the financial risks. We will not consider the day-to-day management of the treasury, but we will be more of a sounding board for discussing large strategic items – in the case of issues such as mergers and acquisitions.
“ It is no longer just the pension fund, but the company also.”