NETHERLANDS - Chemicals group DSM is the first listed Dutch company to shift the investment risks of its pension funds to its employees, according to reports.
As of next year the company doesn’t need to fill up any deficits of its scheme. In case of a shortfall, its 20.000 members need to deal with it by themselves. As compensation, DSM will raise its fixed premium from 12% to 21% during the next five years, the Dutch daily Het Financieele Dagblad said.
“The main reason for DSM’s decision are the new International Financial Reporting Standards, which prescribe reporting the asset position of the pension fund within the company results,” said DSM spokesman Gerard van der Zanden.
“No company likes to confront its investors with a profit which is very dependent on the movements of the stock market,” the paper quoted DSM’s human resources director Jorgen Sorensen as saying. “That has never been the purpose of the pension fund.”
In a statement the company stressed the pre-pension arrangements won’t be changed. Early retirement will still be possible at 62 at 75% the salary. The existing pensions will be raised by two percent. The changes will be costs neutral to its employees, said DSM. The build-up of old-age pension will be raised from 1.75% to 2% a year.
In an unusual move the unions have agreed to the shift. “We are against these changes in principle, but we understand the international developments which made them necessary,” said a spokesman for CNV Vakcentrale. The FNV was even pleased with the results because of the substantial premium from the employer.
SNS Group had earlier made a similar decision. According to the daily, Akzo Nobel is in negotiations about a change to DC. A ‘large number’ of funds are supposed to be looking at similar options.
The DSM scheme has €4bn of assets under management. DSM will try to make the same change of the pension fund of the former Gist Brocades which has €800m under management.
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