NETHERLANDS – The €4.6bn pension fund of insurance provider UWV is planning expand its alternatives portfolio in a bid to achieve its performance and inflation-protection goals.
Over the next three years, its 9% alternatives allocation is to jump to 17%.
Currently, the scheme has invested in commodities (1.8%) and property (6.8%), but it said it would also introduce infrastructure into its portfolio.
At present, the difference between its actual and strategic alternatives holdings has been invested in low-cost, liquid assets.
As of consequence of the planned portfolio adjustment, the UWV scheme said to expected its total costs for asset management to increase by more than 30%, from €14.7m to €20m.
It pointed out that management costs for alternative investments were substantially higher than those for a passively managed portfolio of government bonds.
In 2011, the scheme's asset management costs were 0.31%, 0.09 percentage points lower than the average cost at other Dutch pension funds, according to the Pensions Federation.
The UWV scheme said it would appoint an external expert for asset management on its board.
It added that it would also increase the staffing of its pensions bureau, following the increase of tasks and legal obligations for pension funds.
It said the expansion of its administrative capabilities would increase pension-management costs by 6%.
It also said its visitation committee for internal supervision had been transformed into its new supervisory council.
The coverage ratio at the UWV pension fund was 100.7% at November-end.
The scheme has 51,445 participants – 22,335 active and 9,315 pensioners.