Coverage of Dutch schemes further down in July, says Mercer
NETHERLANDS - The coverage ratio of Dutch pension funds has further decreased from 94% to just over 93% on average in July, preliminary figures from Mercer Investments suggested.
According to Dennis van Ek, principal at Mercer, the 94% applied both to the actual interest curve and the average of the past three months - the current discount criterion - both of which were 2.28% at the end of June.
"However, the funding based on the three-months average has decreased by almost one percent, while the coverage ratio for the current interest curve has risen by almost one percent," the actuary said.
"Because of the decrease of interest rates in June, the three-months average has dropped 10 basis points to 2.18% in July," he pointed out.
Van Ek further explained that, following the mandatory discount rate, the average pension fund saw its liabilities rise by 1.6% in July.
Schemes with many older participants had to add 1.2% on average, whereas less mature pension plans saw their liabilities rise by 2.4%
However, the consultancy calculated its model the average equity portfolio would have generated a 3% profit during July,
For equity holdings of 30% of the pension assets, this means a funding increase of 0.9 percentage point, the pensions advisor concluded.