Belgium: Pensioenfonds UZ Gent: Diverse benchmarks
• Invested assets: €265.4m (Dec 2010)
• First pillar DB scheme
The UZ Gent pension fund, founded in 1995, is unique in Belgium in that it does not provide a second pillar supplementary pension, but replaces the legal first pillar pension for civil servants employed at the University Hospital Ghent. Employees with a normal labour agreement cannot join the scheme.
At present, the €265.4m pension fund has around 5,300 members, 82% of whom are active. Around 6% are deferred. employees who left the hospital with pension rights intact, the remaining 12% are pensioners.
Contributions equal the ones legally required of the first pillar, namely 16.36% of the gross salary, with the employer contributing 8.86% and the employee 7.50% of the gross salary.
As a true DB scheme, UZ Gent pays monthly pensions to its pensioners - its members do not have the option of having their pension paid out as a capital lump sum upon retirement.
Its strategic asset allocation is based on an ALM study of 2005, which was endorsed again as the right strategy by an ALM update and the board of directors in 2009.
It consists of 21% euro government bonds, 13% euro corporate bonds, 3% government bonds in European emerging markets (non euro-zone), 18.65% euro-zone equity, 34.35% equity in the rest of the world and 10% real estate certificates.
UZ Gent has both active and passive mandates. Euro government bonds is a purely passive mandate, while the other bond and real estate mandates are active. In the equity portfolio, the active versus passive ratio is approximately two thirds to one third. Of the total portfolio, around 60% is invested actively and 40% passively.
Its benchmarks are diverse, ranging from MSCI indices - EMU and World non-EMU (hedged) - for equity, to Petercam European Property Shares index (PEPS) for real estate and Merrill Lynch and Barclays indices for bonds.
"All our managers have a specialised and discretionary mandate," says Carl Vanlerberghe, member of and secretary to the board of directors at UZ Gent. "They make the decisions, taking into account the conditions of the contracts. We do not take any tactical decisions ourselves. We only make sure that each asset class stays within the margins specified in the statement of investment principles."
Due to losses incurred during the financial crisis, the pension fund is currently underfunded with a funding ratio of approximately 85%. However, its net inflows in 2010 amounted to €23.6m.