The three large KLM pension funds have reported returns of between 4.3% and 5.5% over the second quarter, but saw their funding only rise marginally due to the effect of falling interest rates on the schemes’ liabilities.
With a return of 5.5%, the €2.3bn scheme for cabin staff (Cabinepersoneel) was the best performing pension fund.
Its year-to-date return on investments is 9.5%.
Its 40.7% fixed income income allocation generated 4.2%, while its 43.6% equity and 9.7% property portfolios delivered 4.8% and 5.1%, respectively.
The scheme’s quarterly profit included a 1.4% result on its interest hedge of 50% of its liabilities.
However, it lost 0.1% on its equity hedge.
The funding of the Pensioenfonds KLM Cabinepersoneel improved by 0.1 percentage points to 123.7%.
The €6.9bn pension fund for ground staff (Algemeen Pensioenfonds KLM) reported a 4.7% return, and a year-to-date return of 8%.
Its fixed income, equity and property holdings produced quarterly returns of 4.4%, 4.6% and 5%, respectively.
At the end of June, the coverage ratio increased to 123.1%.
KLM’s €7.6bn pension fund for cockpit staff (Vliegend Personeel) said it returned 4.3% between April and June, while its funding rose 0.1 percentage points to 133.4%.
The assets of the large KLM pension funds are managed by Blue Sky Group.
In other news, the cockpit staff scheme indicated that its efforts to set up net pension arrangements for the salary part exceeding €100,000 were hampered by a lack of clarity on new legislation.
Despite new and stricter tax rules for tax-facilitated pensions accrual taking effect on 1 January 2015, it is likely that a plan for net pensions will not be operational in time, warned Steven Verhagen, chairman of the association of Dutch commercial pilots (VNV).
He said the situation for pilots is complicated by the number of part-time jobs in the sector.
As a consequence, the accrual limit must be proportionally implemented for the time spent on the job, he said.
He said the VNV’s first priority was the adjustment of the current tax-friendly pension accrual for the KLM pilots from 1.95% to the new limit of 1.875% for the salary of up to €100,000.
According to Verhagen, the pension fund preferred to have its entire pension arrangements carried out by Blue Sky Group, rather than a “much more expensive” insurer.