The DEPF achieved a handsome investment return of 20% for the year 2019. That favorable result cushioned the financial shock in the first quarter of 2020 as a result of the corona pandemic and the price war in the oil industry. In the first quarter of 2020, the DEPF recorded a negative return of 12%. The developments in the rest of the year will depend strongly on how the corona crisis develops. In April, the prices on the stock exchanges recovered somewhat.

Limited interest effect for Belgian section
In addition to the investment return, the interest rate is an important factor for the financial position of the fund. The effect of the interest rate is different for the two Dutch sections of the DEPF and the Belgian section. The valuation of future pension liabilities of the Belgian section is based on an expected long-term return. This is higher than the market interest rate. Consequently, the effect of fluctuations in the actual market interest rate is limited. Thanks to the good investment performance of the DEPF, the funding ratio of the section DuPont Belgium was 117% at the end of 2019, which is well above the requirement of 100%.

Negative impact of low interest rate for Dutch sections
For the valuation of the pension liabilities of the Dutch sections, the interest rate applied for value transfers is considered. The reference date for this is 1 October. On 1 October 2019, this interest rate was at a very low level. This had a substantial negative impact on the funding ratios of the sections DuPont Netherlands and Genencor Netherlands. Despite the good investment performance in 2019, the funding ratios at the end 2019 were at a lower level (112% for DuPont Netherlands and 109% for Genencor Netherlands).
These are still satisfactory levels in comparison with many Dutch pension funds.

Coverage deficit
Meanwhile, the funding ratios have dropped further due to the crisis in the first quarter. As at 31 March 2020, the funding ratio of the section DuPont Belgium was approximately 106%. The funding ratio of the section DuPont Netherlands was around 97% and of the section Genencor Netherlands about 94%. This implies that there is a coverage deficit for the two Dutch sections. However, the financial position of both sections still compares favorably compared to many other pension funds.

Adhere to long-term strategy
“Our strategy is aimed at the long term”, says DEPF chairman Erik van Diepen. “That is why we do not yet take special measures at this moment. We believe that our investment strategy will enable us to restore the financial position in the longer term. Now, it is much too early to make predictions for the rest of the year. If we still have a deficit at the end of 2020, we will have to draft a recovery plan and possibly take measures. For the time being, we adhere to the strategic route we have plotted, and we are closely monitoring all developments.”

Deal with corona crisis
The corona crisis does not only impact the financial position of the pension fund. The employees of DuPont Belgium, DuPont Netherlands and Genencor Netherlands all must deal with it in their daily lives. Where possible, all employees in both countries continue their work as much as possible, although the production capacity cannot always be fully used in all locations. The thoughts of the board are with colleagues who have been affected by the virus personally or people who are close to them.
The administrators and other service providers of the DEPF work from home as much as possible. The pensions are paid in time, the contributions are collected and participants who have questions will receive an answer.

Merger DuPont and IFF
In addition to the corona pandemic and its consequences, there is another development that requires attention from the DuPont employees: the intended combination of DuPont’s Nutrition & Biosciences activities with the company IFF. At this moment, no decision has been taken yet about what will happen with the pensions of employees who transfer to IFF. Where necessary, further consultation will first have to take place between the companies and the employee participation bodies involved. We will keep you posted of the developments via the website and the newsletters.