Unilever's Progress sees returns plummet 26%
NETHERLANDS - Progress, the Dutch pension fund of household goods giant Unilever, saw the value of its assets drop by almost €1.2bn or 26% in 2008, as its investment strategy struggled to cope in turbulent markets.
The pension fund is now worth €2.77bn against pension liabilities of €2.76bn, and the scheme has to submit a five-year recovery plan to De Nederlandsche Bank (DNB) as its cover ratio has fallen from 165% in 2007 to 101% by the end of last year.
A statement from Progress said members will not receive any indexation payments in 2009 on the back of its poor performance, which was caused by both a €360m rise in liabilities and “an enormous worldwide fall” on the returns of almost all asset classes.
That said, Progress said it expects to return to the required minimum cover ratio within one year once it enacts its recovery plan.
The parent group, Unilever, has already injected €44m into the fund this year but warned it may have to contribute even more later this year, depending on the course of the investment markets.
A further breakdown of its asset allocation and returns data showed its 47% allocation to equities lost 42%, while a 29% allocation to fixed income returned -4.4% and a 21% property holding delivered a positive return of 1.2%. No return figures are given but the fund also has a 3% allocation to private equity and commodities.
The scheme does have slightly fewer members now, as the total number of participants has dropped from 25,389 in 2007 to 24,965 in 2008.
The scheme’s full 2008 annual report 2008 will be published in May.
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