NETHERLANDS - The €4.7bn pension fund of telecoms giant KPN has ceased investing in French and Italian inflation-linked bonds in an aim to decrease risk.
Individual savers in its defined contribution (DC) arrangements will instead see the investment strategy focus on German inflation-linked bonds, it said.
Pensioenfonds KPN had already reduced its investments in Italy last year, it said.
The scheme’s fixed income portfolio for individual pension savers consists of 20% passively managed inflation-linked bonds, 40% passively managed nominal government bonds and 40% actively managed credits.
Since last May, the pension fund has only invested in AAA-rated government bonds issued by Germany, the Netherlands, France, Austria and Finland.
Employees at KPN earning more than €45,378 participate in a DC scheme offering life-cycle investments or so-called ‘freedom of choice’ investments, in one of its seven investment options.
For workers with a salary of as much as €45,378, the pension fund offers average salary arrangements.
Assets in life-cycle plans total approximately €120m, while combined ‘freedom of choice’ savings amount to approximately €9m.
The pension fund’s coverage ratio was 97% at November-end.
Meanwhile, the Dutch funds of clothing retailer C&A and consumer goods company Unilever have both granted their participants indexation, effective from the beginning of the month.
The €1bn C&A scheme, Provisum, granted its 2,595 pensioners and 3,525 deferred participants an inflation compensation of 2.61%, in line with the annual consumer prices index in October 2011.
However, it added that its 3,800 active members would not receive indexation, as their inflation compensation is linked to the salary index, and their salaries had not increased in 2011.
Progress, the €3.5bn Dutch pension fund of Unilever, granted its 12,445 pensioners and 8,260 deferred participants an indexation of 2.33%, equating to the rise in the costs of living in the 12 months to November 2011.
The 3,530 active participants of Progress received an indexation of 1.75% for their salary up to €73,546.
Inflation compensation for the salary in excess of that figure is dependent on the pension fund’s performance over five years, which was flat.
The funding ratio of the Unilever scheme was 118% at the end of September (it declined to provide more recent figures), while Provisum’s coverage ratio was more than 110% at the end of last year.