Three unions have demanded an additional contribution of €400m from “rich” employer AkzoNobel towards its €5.3bn pension fund in the Netherlands.
In the opinion of unions FNV, CNV and VHMP, the scheme should benefit from the planned sale of the company’s chemical subsidiary, which is expected to fetch billions of euros.
According to a report in the Financial Times yesterday, Dutch asset manager PGGM was involved in talks to buy the business unit, in collaboration with private equity group Apollo.
Currently, the Pensioenfonds APF has 5,600 active participants, 11,000 deferred members and 18,000 pensioners.
The unions are concerned that the planned sale of the chemical unit would increase the proportion of older participants. At December-end, the pension fund’s coverage ratio stood at 106%.
Han Jalink, chairman of the Pensioenfonds APF, confirmed that the scheme would welcome a financial boost from the employer to improve the perspectives for indexation.
“There hasn’t been any indexation for a long time and the risks for the pension fund are increasing,” he said.
However, the pension fund has a collective defined contribution (CDC) scheme and the employer doesn’t have an obligation to top up its pension fund.
The chairman said the pension fund had suggested that the employer granted a subordinated loan, funding the scheme while avoiding having to redefine its pension plan under the accounting rules of IFRS.
“The assets could be temporarily used for generating returns, to speed up the recovery process of the pension fund,” Jalink explained.
He emphasised that the loan would not necessarily be used to raise the risk profile of the scheme’s investments “as it already has a return portfolio of 52%”.
In the opinion of the FNV, however, the contribution should be considered as a gift “because AkzoNobel has promised a lot of money to its shareholders”, said union trustee Erik de Vries.
“The sale of the chemical unit is to fetch more than €7bn and the executive board wants to give this to the shareholders,” he said. Shareholders had already been promised a share of a €1.2bn payout following AkzoNobel’s rejection of a takeover bid last year.
“The board mobilised the support of the unions and its works council when it resisted the takeover, but this support doesn’t come for free,” De Vries said.
According to De Vries, the €400m injection would help the pension fund meet its full funding requirements and would enable it to grant a full compensation for inflation.