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Unilever fund reaches 155% coverage ratio

NETHERLANDS - The almost €4bn Progress pension fund of Unilever in the Netherlands has returned 9.6% and increased its coverage ratio to 155% in 2006.

The fund commented that coverage ratio was up by three percentage points despite a strengthening of mortality assumptions that cost 12 percentage points.

Due to the "excellent financial position" of the scheme, the fund expects a considerable discount on contributions, it stated in a press release. As of January the fund could fully index pensions with an increase of 1.25%.

Following an agreement between Dutch unions and Unilever the scheme switched to career-average for participants born after 1950. A similar step is currently being negotiated for the company's £5bn (€7.43bn) British scheme.

Total return of 9.6% were almost half the returns from a year before. Equity returns of 12.7% beat the benchmark by 0.3% while the return on fixed-income of 0.5% was 0.7 percentage points higher than the benchmark.

The fund's 14% property allocation returned 8.2% compared to 11.5% in 2005.

Unilever's Progress fund was set up 85 years ago and now has 25,684 participants, down from 26,013 a year ago.

Ten-year annualised returns are 8.8%.

 

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