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Dutch schemes performed ahead of recovery plans

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NETHERLANDS - Dutch pension fund cover ratios pulled back somewhat last year after suffering significant losses in 2008, to an average 111% by the end of 2009, research from Hewitt Associates has claimed.

The consultancy firm said this quick recovery means most pension funds are now ahead of the goals they had set in the recovery plans written last year.

The average funding ratio of Dutch pension plans rose by a further 3% in December, which in turn led to a14% increase in pension plan assets for the whole of 2009, according to Hewitt.

"The recovery is remarkable, given the absolute low cover ratio in March [2009] of 90% on average," officials said.

Hewitt attributed the increase in the funding ratio largely to the improved equity markets, noting that only 1.5 percentage points of the improved cover ratio was generated by rising fixed income interest rates.

Short to medium-term interest rates, up to 13 years, have decreased yet yields on longer-term holdings have increased to slightly over-compensate for this split effect, said Hewitt.

The consultancy's end-of-year performance figures are only an indicator of possible Dutch pension fund returns, however, as the findings are based on a fictitious pension fund, created on the back of information from pensions regulator De Nederlandsche Bank (DNB) and investment data provider the WM Company.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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