NETHERLANDS - The industry-wide pension fund for construction workers, BpfBouw, saw its equity portfolio return nearly 19% in 2010, according to newly released year-end results.
The €29.4bn scheme reported positive results across all its holdings, with equity outperforming both fixed income's 7.2% and real estate's 3.3% returns.
With hedging taken into account, BpfBouw returned 10% across its entire investment universe. However, according to preliminary first-quarter results, its hedging activities resulted in slight losses until March, cancelling out modest overall returns of 1.6%.
The sector-wide scheme also revealed further improvement to its coverage ratio, which had fallen to 97.1% in August as a result of rising longevity and fluctuating interest rates. As of the end of April, it stood at 112.2%.
Meanwhile, further details regarding the transfer of construction company VolkerWessels' pension scheme to BpfBouw have emerged, with a buy-in confirmed. The transfer to BpfBouw will cover approximately €1bn in assets.
To facilitate the transfer, the corporate sponsor made a one-off contribution to boost pension fund assets to the required level.
In addition to transferring pension rights to BpfBouw, the scheme has also taken out an insurance contract for part of the rights with Dutch insurer Nationale-Nederlanden.
The rights transfer is to be effective retroactively as of 1 January 2011. This coincides with the date that former pension fund director Rob Kragten left the VolkerWessels scheme to take on a position as director of the Unilever Progress Pension Fund.
His departure coincided with a reported change in investment strategy at the VolkerWessels scheme.
Under Kragten's direction, the scheme had in 2007 launched its First Liability Matching platform, with the objective to closely match future cash flows. As part of this innovative investment approach, the VolkerWessels scheme allocated substantially to hedge funds.