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Willis Towers Watson Netherlands is to wind up its company pension fund next year and transfer accrued pension rights to its own low-cost defined contribution vehicle (PPI).
The scheme’s board said its existing arrangement’s costs were too high and it had to invest too much in governance relative to the pension fund’s scale.
Next year existing staff will transfer to LifeSight, the company’s defined contribution (DC) fund. New staff have been enrolled into LifeSight since 2015.
At the end of 2017 the pension fund had more than 400 participants, predominantly deferred members. It reported administration costs of €585 per participant for 2017.
Until 2011, Willis Towers Watson offered all staff a defined benefit (DB) plan.
The advisory giant’s decision to switch to DC is part of a trend among Dutch pension consultancies.
In 2016, Mercer also adopted DC arrangements, choosing ABN Amro’s PPI for new staff.
Smaller consultancies, including Montae, Focus Orange and Sprenkels & Verschuren, have already DC plans in place.
Mercer considers DC shift
In Mercer’s €129m pension fund, almost 200 staff are accruing a pension under DB arrangements. However, the employer would like to switch to DC, according to its most recent member newsletter.
In 2016 and 2017, the sponsor had to pay additional contributions of €1.7m and €743,000, respectively, in order to plug the scheme’s funding gap.
At September-end, its coverage ratio stood at 103.7% – still short of the minimum level of 105% required by the end of this year – which could make another additional payment necessary.
The employer said that it didn’t have concrete plans for DC in the Netherlands yet, but added that it was Mercer’s global policy to offer its staff a DC pension.
Marc Heemskerk, trustee at the pension fund, said he expected it would take some time before the active participants switched to DC, as the employer had to consult employee representatives about any changes first.
“Subsequently, the sponsor and the pension fund have to discuss how to deal with the accrued pension rights and the employer’s duty to fill the funding gap,” he said.
Currently, consultancies Aon and Ortec have no plans to switch from their current DB plans to DC, but both are seeking consolidation in pensions provision.
Aon is the process of transferring its pension schemes to its Belgium-based pan-European multi-company pension fund United Pensions.
Last year, the Ortec pension fund joined Volo, a multi-employer scheme established by asset manager PGGM. However, the consultant is now seeking new options after PGGM recently announced that it would cease supporting Volo.
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