NETHERLANDS - The €4bn pension fund of chemicals and paint giant AkzoNobel has established its own pension bureau to improve policy preparation, supervision on its pension provider and its relationship with external experts.
In addition, it has extended its audit committee with external experts, according to its annual report for 2010.
The AkzoNobel scheme reported a 7.8% result, after a loss of 1 percentage point on balance, due to the effect of various hedges.
Its 33% equity allocation returned 18.3%, the pension fund said, adding that it had decided to decrease its strategic allocation from 40% to 30%.
The equity hedge through put options contributed -0.3 percentage points to the result, but the board said it considered this a premium for limiting the risk of an extreme drop in value for the portfolio.
The 51% fixed income holdings of the Stichting Pensioenfonds AkzoNobel generated 3%, outperforming its benchmark by 0.6% percentage points, mainly due to underweight positions in the PIIGS countries.
The scheme's property and commodity investments returned 6.9% and 19.3%, respectively.
The currency hedge of the US dollar, UK pound and Japanese yen also contributed negatively - 2.2 percentage points - to the scheme's overall performance, following the appreciation of these currencies compared with the euro.
In contrast, the 50% interest hedge on the scheme's liabilities added 1.5 percentage points to the result, as the long-term interest rates fell by 0.5 percentage points on balance last year.
The AkzoNobel Pensioenfonds saw its coverage ratio decrease to 105%, which is 6 percentage points short of its required financial buffers.
Following agreed salary increases, the scheme decided to grant its active participants a combined indexation of 1.25% for 2009-10, but refrained from an inflation compensation for its pensioners and deferred participants, as the scheme's financial position was "still too brittle".
The pension fund also said it concluded a new pension contract for 2010-15, with the employer contributing 29.1% of the pensionable salary to the collective defined contribution scheme. It added that worker premiums had been set at 5% for 2010.
Syntrus Achmea Pension Management is the pension provider for the AkzoNobel pension fund, while Syntrus Achmea Asset Management is its fiduciary manager, as well as manager of its fixed income portfolio.