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Unilever Progress scheme returns 19.4%

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NETHERLANDS – 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.

In a statement from the scheme, the increased returns were labelled “substantially higher than in recent years”.

The scheme’s average total investment return over five years stands at 3.7%. However the average over 10 years is 9.9%.

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%. 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 – thought 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.

Meanwhile, the Progress fund’s fixed income portfolio achieved a 4.6% return, and real estate brought in an 8.2% return.

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 Progress scheme has a total of 26,013 participants and pensioners. It was established 85 years ago.

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