NETHERLANDS – The €3.265bn Unilever Netherlands Pension Fund Progress, which has seen two of its top managers depart recently, missed its benchmark return in 2004.
It returned 8.7% on investments, against a benchmark return of 9.4%. It returned 13% in 2003.
Earlier this month managing director Alco Vernooy announced his retirement. This followed the departure in January of chief investment officer Walther Schapendonk amid a plan to pool the scheme’s equity assets, which account for 60% of assets.
According to the fund, the overall coverage ratio improved by seven percent during 2004, reaching 137%. This was largely caused by an increased pension fund capital of €3.265 billion euros, up €113m over end-2003.
Liabilities fell €30m to €2.389bn – meaning it now has a small surplus, when taking into account the required short-term buffers by the DNB.
Equities returned 9.8%, against 16.8% a year before, while bonds supplied a 6.5% yield. Real estate yielded eight percent.
The lower yield on equities was due to underweighting in European small and mid-cap stocks – while large-caps were overweight.
The scheme confirmed that discussions are taking place about outsourcing the equity portfolio. One of the options is to pool the portfolio with other Unilever pension funds to gain synergies.
The fund also has raised a cost-effective pension premium, which has been for the first time during 2004. For 2005, the fund will proceed with the current system in place. In contrast to other Dutch pension funds, Progress, due to its financial position, has been able to decide that indexation for 2004 will be raised to 0.82%.
Meanwhile, steel firm Corus announced an agreement with the trade unions regarding its collective labour agreement, or CAO – under which the pre-pension arrangements of 10,000 staff will stay the same.
Corus is the first company that has been willing to reach such an agreement in the Netherlands. Additionally, the overall pension date for its employees stays at 62 years.