Social partners for the €5.3bn defined benefit (DB) pension fund for Unilever workers in the Netherlands – which has been closed for accruals since 2015 – do not want the fund to make the transition to the new defined contribution (DC) pension system.
The Progress fund, one of two Unilever funds (the other one being a collective defined contribution (CDC) scheme called Forward) that joined the new Unilever general pension fund (APF) in 2017, is planning to instead continue in the current DB system.
Progress, which made the announcement in its annual report for 2022, already said back in 2020 that it would likely not make the transition to the new pension system.
The main reason for this is that the employer Unilever is under an obligation to fill any funding gaps in the current DB arrangement, which the new DC system does not allow for.
The fund, with more than 18,000 members, said social partners informed the fund late last year that they did not want to move Progress to the new pension system.
According to the board of Progress, which has advised positively about staying in the current DB system, the decision will not adversely affect members.
What makes the fund stand out compared to its peers is its funding level. At 169% at the end of April, Progress has the second-highest funding ratio of all Dutch pension funds – the only pension fund with an even higher funding ratio (at approximately 200%) is that of investment company HAL, the owner of IPE’s parent company FD Mediagroep.
This makes it relatively easy for the fund to stay in the current DB system, under which it will have to gradually dial down risk as its population ages.
The other Unilever fund, Forward, will make the transition to the new pension system.
Unions and employer Unilever have, however, not yet chosen between the solidarity and flexible contracts. This fund had a funding ratio of 149% at the end of April and has nearly 2,700 active participants. It has some €500m in assets under management.
Univest to slim down
Univest, the investment vehicle of all global Unilever pension funds, will hand over a corporate bond and a government bond portfolio that it manages for Progress to external managers.
Due to tighter regulations, Univest would have to make significant investments in order to be able to continue managing these portfolios, according to Hedda Renooij, director of the Unilever pension funds.
She added the move “is not a major shift for Univest” as the other Progress portfolios are already managed by external parties. According to her, it is part of a drive for greater efficiency.
The Unilever APF also announced it would start a new search for an integrated LDI manager.
According to Renooij, this is part of a standard periodic review in which the fund’s current LDI manager Cardano will also be involved.
This article was first published on Pensioen Pro, IPE’s Dutch sister publication. It was translated and adapted for IPE by Tjibbe Hoekstra.
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