mast image

Special Report

Impact investing

Sections

Dutch pensions giants see returns improve further

Related images

  • Dutch pensions giants see returns improve further

Related Categories

NETHERLANDS - The €86bn healthcare scheme PFZW and the €33bn metal pension fund PMT saw their investments return 4.2% and 2.5% respectively in the fourth quarter, leading the schemes to deliver overall results of 17.6% and 14.8% for 2009.

By the end of Q4 2009, PFZW's cover ratio had risen to 108%, up from an absolute low of 89% in March. Officials noted its latest total cover ratio is two percentage points lower than could have been achieved as assets were offset to partial indexation of 0.72% as well as make provisions for the cost of increasing longevity.

The healthcare scheme attributed 13 percentage points of the funding ratio rise to the combined effect of investment returns, accrued interest and its liability hedge against interest rate risk.

Another 5% gain was added as a result of a 0.34% rise in long-term interest rates to 3.89% during 2009, it said.

PFZW's equity portfolio returned 6.5% in the last quarter, leading the pension fund to deliver a full year returns of 28.5%. But it was investments in structured credits which delivered the highest return of 64.7% on holdings, the scheme reported.

Fixed income delivered 1.9% in the fourth quarter to give and 15.4% for the full year. High-yield bonds and inflation-linked bonds returned 36.1% and 9.8% respectively in 2009.

The scheme also said its commodities and property holdings generated 21% and 9% returns respectively, whereas public real estate and its infrastructure portfolio, which is still under construction, generated returns of 38.1% and -0.1% respectively.

PFZW said its unlisted investments in its 4.6% ‘portfolio of strategies' also benefited from the positive market sentiment, as they achieved a 10.3% return.

According to the pension fund, it can clearly demonstrate a broadly diversified portfolio with high and stable long-term returns as its annual returns since 1971 is 8%.

Elsewhere, PMT 's 23% equity holding returned 6.4% during the last quarter of the year and 39.3% for the whole of 2009, while its 51% allocation to fixed income delivered 1.4% and 19.3% respectively.

Officials said the metal scheme's investments in alternatives returned 11.7%, but its property allocation generated a negative return of -2.8%.

PMT officials explained that the relatively high returns on risk-bearing investments cushioned a decrease in value of fixed income investments. "This was thanks to the rise in interest swap rates, which also led to a decrease in liabilities," said PMT.

The pension fund's cover ratio was 101% by the end of 2009, albeit this is still short of the legally-required minimum of 105%.

The scheme said it has yet to make provisions for the prospect of a longevity rise among its members. But that decision will be taken in September, and will take into account the specific characteristics of its participants.

And the €21bn metal scheme PME reported it generated a 2.5% return on investments in the last quarter, lifting the fund's overall return to 13.4% for the full year.

A PME spokeswoman said the pension fund has decided to delay publishing its detailed quarterly figures, as it wants to take new longevity tables into account when establishing its new cover ratio.

At the end of November 2009, PME's funding ratio was 100%.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2543

    Asset class: Search of an Asset manager / Advisor managing / Advising a risk-based equity derivatives overlay program.
    Asset region: Global Developed Markets Equities, Global Emerging Markets Equities, Swiss Equities.
    Size: CHF 700-2100 million.
    Closing date: 2019-06-17.

  • QN-2544

    Asset class: Transitional Real Estate Debt.
    Asset region: North America (USA/Canada).
    Size: $50-100mn.
    Closing date: 2019-06-17.

  • QN-2546

    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

Begin Your Search Here
<