Dutch retail fund seeks co-operation with similar schemes
NETHERLANDS - Detailhandel, the €7.7bn pension fund for the retail sector, is seeking co-operation with similar sector-wide schemes “to keep on providing a proper pension to its participants”.
René Upperman, director of the scheme’s new administrative bureau for monitoring outsourced tasks, said: “We are not only aiming for benefits of scale, but such a co-operation will also provide social advantages, as well as benefits on communication and mobility for participants.”
At the start of 2010, Detailhandel had already “taken in” the €150m industry-wide scheme for opticians, with 12,700 participants and 1,015 affiliated companies, according to its 2009 annual report.
Meanwhile, the scheme said it returned 13.2% on investments, but lost 6.9 percentage points due to the effect of its interest and currency hedge.
Its coverage ratio increase by 3 percentage points to 101% at year-end, including a financial provision of 7% for increased longevity.
However, the coverage ratio has fallen to 97.2%, largely due to a steep drop in interest rates during the second quarter of 2010, Upperman said.
The retail scheme indicated it has covered 60% of the interest on its liabilities through a dynamic hedge of swaps and swaptions, as well as bonds in its fixed income portfolio, adding that 75% of the risks on the main currencies had also been hedged.
Officials pointed out that the pension fund had postponed the yearly re-balancing until July, when the market volatility had decreased.
The scheme then adjusted its investment portfolio by adding equity at the expense of less risky fixed income investments.
Detailhandel’s 35% equity portfolio returned 30.8% due to a “focus on strong European and US companies”, which generated 33.9% and 23.8%, respectively.
Emerging markets returned 68.5%.
The fixed income allocation of 54% delivered 7.6%, profiting from credits after government bonds were swapped for company loans in the first quarter.
According to officials, the tactical asset allocation contributed modestly to the scheme’s overall result.
They said they have concluded a new contract for pension administration with Syntrus Achmea, but had not yet decided whether to extend its current commitment on asset and property management with the same company.
“We are still considering how to increase our checks and balances while working with one provider,” Upperman said.