NETHERLANDS - Royal Philips Electronics is selling its pension administration and investment management capabilities, both part of Philips Pensions Competence Centre (PPCC), for an undisclosed amount.
PPCC, based in Eindhoven, provides pensions management and administration services for 165,000 scheme members, including 137,000 members of the Philips Pension Fund (PPF), through its subsidiary Philips Pension Management (PPM).
Hewitt Associates will acquire the pension administration services and Merrill Lynch Investment Managers will take over the investment management activities.
The deal with MLIM includes a seven year contract to manage US$16bn (e13.5bn) on behalf of PPF.
Philips spokesperson Andre Manning said pension administration was no longer a core activity for Philips.
“Ten or 15 years ago we had around 260,000 employees, of which 40 or 50,000 were located in the Netherlands,” he said.
“Nowadays we have 160,000 employees, of which 26,000 are located in the Netherlands. With the future trend of a decreasing number of employees in the Netherlands instead of increasing, we think that it’s not absolutely necessary to manage the pensions by Philips itself.”
All 88 Philips staff members will be transferred to Hewitt as part of the deal.
Commenting on MLIM’s acquisition, Robert McCann, executive vice president and vice chairman of the Merrill Lynch Wealth Management Group, said: “The Netherlands is the second biggest pension market in Europe after the UK. This acquisition will make MLIM the largest non-domestic active manager in the country and will also give potential Dutch clients a true alternative to local managers.”
Jan Hommen, CFO and vice chairman of Royal Philips Electronics, commented: “The transaction should enable Philips and PPF to benefit from world-class expertise, and allow us to capitalise on our earlier investments in the business. The transaction will also open new and interesting career opportunities for PPCC’s staff.”
Both transactions are expected to close in the course of the year.
Mark Evans has been appointed as a director at Independent Trustee Services (ITS) to lead trustee appointments in London.
The Pension Protection Fund (PPF) is consulting on changes to the actuarial assumptions it uses in valuations in a bid to better reflect the bulk annuity market, with schemes set to move into surplus on aggregate.
Private sector defined benefit (DB) schemes were 96.3% funded on a Pension Protection Fund (PPF) compensation basis at the end of July, according to the lifeboat fund's monthly index.
Conduent has completed the sale of its actuarial and human resource consulting business to private equity investor, H.I.G. Capital.