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IPE special report May 2018

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Netherlands roundup: Pension funds returned 38.6% since 2013

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Dutch pension funds’ investments gained 38.6% in total between the start of 2013 and the middle of this year, their quarterly reports have revealed.

The schemes achieved the best results in 2014 and 2016, with net profits of 19% and 10.4%, respectively, according to IPE’s Dutch sister publication Pensioen Pro, which looked at the figures submitted to supervisor De Nederlandsche Bank (DNB).

It found that alternatives – predominantly private equity – returned 78.6% in total during the 4.5-year period, with liquid equity (66.9%) and real estate (45.2%) also performing very well.

Hedge funds generated 19.8%, while commodities almost halved in value, decreasing 47.6%.

Pensioen Pro also found that fiduciary management now covers 95% of Dutch combined assets of €1.28trn.

Pro, which has surveyed fiduciary management in the Netherlands for the tenth consecutive year, said that it had increased sevenfold in this period.

Interest hedging up in third quarter

Dutch pension funds slightly increased their hedging of interest rate risk on liabilities in the third quarter of 2017.

DNB statistics revealed that schemes raised the interest cover by 0.9% on average, to 51.3%. 

The regulator said that 62% of schemes increased their interest hedge, while 31% reduced the cover.

However, the DNB figures showed significant differences between pension funds. For example, the €5.3bn sector scheme for care insurers (SBZ) reduced its hedge by 8.4% to 52.9%, while the €3bn pension fund for the furnishing industry (Meubel) raised the cover by 8.7% to 52.4%.

The €403bn civil service scheme ABP reduced its interest hedge from 27.7% to 27.2%.

Bigger pensions say for small companies’ staff 

The Dutch cabinet wants staff of small companies to have a greater say about their pension arrangements.

In a letter to parliament, social affairs minister Wouter Koolmees announced legal proposals to strenghten the position of staff associations or representatives through an improved right to information as well as raising issues.

These bodies play a role at small companies of up to 50 employees, which are exempt from having an official works council (OR).

Koolmees suggested that small firms hold a staff meeting twice a year or that staff voluntarily set up representation.

Either would entitle them to the right to advice about pension adjustments affecting more than one-quarter of staff.

To increase the heft of this right, the cabinet wants to force companies to give the staff bodies sufficient notice, in writing, of the pending charges, the minister said.

He added that he would also allow staff representations to put pension topics on the agenda.

However, Koolmees made clear that introducing a right of approval, as the OR has, would be a step too far, as the administrative burden might deter small employers from offering a pension scheme.

 

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