The €3.8bn Dutch-based Unilever Progress Pension Fund achieved a 19.4% total return on investments in 2005 – up from 8.7% in 2004. The scheme, commented that the increased returns were “substantially higher than in recent years”.
Despite low interest rates, the coverage ratio increased by 15 percentage points to 152% in 2005.
Pension assets increased by €509m, while pension liabilities increased by €94m to roughly €2.5bn. Meanwhile, pension benefits were pegged at €150m versus €147m in 2004.
It made a return on equities of 30.2%. The fund’s fixed income portfolio achieved a 4.6% return, and real estate brought in an 8.2% return.
Towards the end of 2005, the fund outsourced a large portion of its internally managed equity portfolio to the Unilever-established and Luxembourg-based pension asset-pooling vehicle Univest.
Unilever set up Univest –envisaged to grow to between €3bn and €5bn - to reduce risk and enhance net return potential. It provides a “diversified external manager” facility for Unilever schemes worldwide. Unilever’s Dutch and UK funds each placed more than €1bn into the new vehicle.
According to the scheme: “Thanks to the fund’s healthy financial position it was possible for the pensions and pension entitlements of non-contributory participants to be increased by 1.45% with effect from 1 January 2006, which is in line with the provisional indexation policy. In fact the pensions are fully indexed.”
The scheme’s average total investment return over five years stands at 3.7%. However the average over 10 years is 9.9%.
The Progress scheme, established 85 years agohas a total of 26,013 participants and pensioners.