Pension fund for Philips loses 2.2% in second quarter

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NETHERLANDS – The €14.8bn pension fund of electronics giant Philips lost 2.2% on investments over the second quarter.

Combined with a decreased discount rate for liabilities – the three-month average of the forward curve with the application of the ultimate forward rate – the scheme’s funding dropped by 4 percentage points to 102%, 3 percentage points short of its required funding.

The negative result was mainly due to a 2.6% loss on its 70% liability-matching portfolio of bonds and bonds-related investments, after interest rates were raised, the pension fund said.

Its 30% return portfolio – meant to finance additional inflation, longevity and costs – generated a loss of 1.2%.

The pension fund attributed the negative performance to global equity markets and falling emerging market bond yields.

The return portfolio of the Philips Pensioenfonds consists of equity, property, emerging market debt and high-yield credit.

Its required financial reserves equate with a funding of 107%. At this level, the scheme could begin granting indexation, it said.

During the second quarter, the Philips pension fund saw the number of participants drop to 14,270 active participants, 59,465 pensioners and 32,935 deferred members.

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