NETHERLANDS - Feed manufacturer Nutreco will be transferring its defined contribution (DC) top-up and pre-pension arrangements - which serve more than 2,000 participants in the Netherlands - to a new DC pension vehicle (Premium Pension Institution) operated by asset manager Robeco.
The move follows an earlier announcement that the Nutreco pension fund would be wound up and that the main pension scheme for the Dutch business units had been transferred to insurance company Aegon from 1 January.
Robeco PPI will take on the supplementary DC top-up from 1 January 2012.
The Dutch pension fund of feed and fish feed company Nutreco was severely affected by the credit crisis and suffered a decline of its coverage ratio from 130% to a low of 78% at the end of February 2009.
Although the scheme narrowly escaped benefit cuts in 2010, it ended the year with a funding ratio of just 87%, prompting the company and the board of trustees to explore insurance buyout solutions, which would virtually eliminate the risk of future benefit cuts, the scheme said.
The scheme had assets under management of more than €295m at the end of 2010.
The asset transfer to Robeco PPI will involve "tens of millions", according to Robeco spokeswoman Janneke Dijkstra.
Theo Versteegen, corporate pensions manager at Nutreco, said: "In our role as an employer, we worked with our pension fund to find a reputable partner to not merely administer the DC arrangements with all due care and on favourable terms, but to take them off our hands entirely."
He added that Robeco's PPI offered the best solution.
The Robeco Premium Pension Institution, which is set up as a foundation, was one of the first to be licensed by the Dutch regulator in August.
Dijkstra said: "Besides Nutreco, we have several other prospective clients in the pipeline, among them two of the bigger pension funds."
Jacqueline Lommen, director of European pensions at Robeco, said: "A PPI solution affords companies more control of their pension liabilities because premium contributions are fixed. The impact on profit and loss accounts becomes more predictable, and pension liabilities no longer weigh on the balance sheet under the international accounting rules, IFRS.
"Moreover, European DC arrangements can be managed by a single partner. For employees, a PPI solution means they get a sound pension plan with low risk and a pension accrual system that is easy to understand. Nutreco's choice confirms that a PPI can also be an excellent solution for pension funds in the process of winding up."
Lommen has been one of the pioneers in the development of the Premium Pension Institution (PPI).
Since 2008, she was actively involved in designing and executing the first big cross-border European pension schemes at Aon Hewitt.
Previously, she was supervisor of pensions at the Dutch pensions regulator and a member of EIOPA. She was also involved with fine-tuning the IORP Directive.
Robeco's PPI implements a so called 'smart pension' arrangement, which is invested according to the life-cycle principle.
"Employees benefit from this approach because a number of risks - including stock market risk, inflation risk and interest rate conversion risk - are being hedged," Lommen said.
The approach can also be viewed as an implementation of the new Dutch Pensions Agreement, as life-cycle investing closely matches participants' risk profile, she added.