Some of Belgium’s biggest companies are faced with a pensions shortfall which could hit their 2003 results due to a pension plan adjustment, says Belgian asset manager Puilaetco.
Although no companies were identified by Puilaetco as having high exposure, some – including names such as Agfa Gevaerts, Fortis and Interbrew – were found to have a potential impact on 2003 earnings of between 1% and 5% (net current profit before goodwill amortisation).
Puilaetco’s report Pension funds exposure – Who is at risk? estimates that photographic and electronic imaging systems company Agfa Gevaerts could see its earnings “negatively impacted by e5m–10m (before tax) from 2003 onwards”.
Two of Agfa’s three pension systems are at risk, the report states. They are its unfunded defined benefit plan, which is mainly in Germany, which has a pension provision of e643m as of December 2001; and its funded e1bn defined benefits plan (of which half is invested in equity).
Insurance and banking group Fortis’ e5.9bn defined benefits plan has around 30% invested in shares. Puilaetco cites Fortis as saying that each 10% decline in stock markets at the end of 2002 versus the beginning of the year would have a yearly negative impact (before tax) of around e10 bn on its bottom line as of 2003. At current market levels, says Puilaetco, the impact could be more like e30m.
The shortfall at the world’s third largest brewer, Interbrew, is estimated to reach e300m. Between 50% and 60% of its e2.5bn fund is invested in equity, Puilaetco says.
Many other companies could also be at risk, but lack of transparency makes it difficult to judge the pension fund exposure, the report adds. Puilaetco hopes the implementation of new accounting standards in the coming years will improve the situation.
Under IAS 19, when accumulated actuarial gains or losses exceed 10% of the greater of the defined benefits obligation or the fair value of plan assets, a portion of the excess must be recognised as an income or expense in the balance sheet.

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