- Results include changes in the company’s Dutch pension plan and associated one-off EUR 600 million contribution in 2014.
- Proposed changes in Dutch pension plan follow recent changes in Philips’ US pension plan, as a result of which the company will recognize a one-off curtailment gain of EUR 78 million in Q2 2013, reported under EBITA.
Amsterdam, the Netherlands – Royal Philips (NYSE: PHG, AEX: PHIA) and Dutch trade unions today announced the results of their negotiations for the collective labor agreement for Philips’ workforce in the Netherlands. The negotiation results, which are subject to approvals, cover the period January 1, 2013 till December 31, 2014 and include a collective wage increase and changes in Philips’ Dutch pension plan, which is the company’s largest pension plan.
“We are working hard with all the relevant stakeholders to create a sustainable pension framework for Philips’ employees and for our company; following the curtailment of open ended obligations in the US pension fund earlier this quarter, we are pleased that the Dutch collective labor agreement is another important milestone in that direction” said Philips Chief Executive Officer Frans van Houten. “The results express the strong commitment from all the parties involved in the negotiations to ultimately reach a balanced agreement in tough economic times.”
The proposed changes in the Dutch pension plan comprise a change in the retirement age (from 65 years to 67 years), a fixed annual company cash contribution rate for the next 5 years and the introduction of an employee contribution. In connection with these changes, the broad outlines of a new funding agreement have been agreed upon as part of which Philips will no longer be liable for the funding of potential future deficits of the plan. As part of this change in funding, Philips intends to make an one-off EUR 600 million contribution to the Philips Pensioenfonds, the company’s Dutch pension fund. The new funding agreement and its implementation are subject to approval by the Trustees of the Dutch pension fund, and is expected to become effective on January 1, 2014.
The proposed new funding agreement for the Dutch pension plan is in line with Philips’ objective to mitigate the company’s financial exposure to its pension plans. Earlier this quarter Philips successfully changed its US pension plan rules. Due to this change, Philips will recognize a one-off curtailment gain of EUR 78 million in the second quarter of 2013, which will be reported under EBITA.