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Philips and KLM schemes achieve 10% gains in 2016

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The €19bn Philips Pensioenfonds gained 10.2% on investments over the course of 2016, despite a 2.8% loss in the last quarter.

The fund also recorded a combined loss of 0.4 percentage points on its inflation and interest rate hedges. At year-end, the pension fund’s coverage ratio stood at 108%.

With a predominantly older population, the Philips scheme has divided its investments across a 40% securities portfolio and a 60% matching portfolio. The securites portfolio mainly comprises equity (29%) and property (10%), while the matching section includes government bonds (35%), credit (10%), mortgages (5%), and emerging market debt (5%).

Elsewhere, Dutch airline KLM’s €2.8bn scheme for cabin staff generated a 10% return during the year but lost 1% in the fourth quarter, resulting in funding level of 105.7%.

Its fixed income holdings and equity portfolio yielded 7.4% and 8.7% respectively last year, the scheme said, while its real estate assets – which make up roughly 10% of the total portfolio – gained 5.2%.

The €8.3bn pension fund for KLM’s pilots reported an annual gain of 7.6%, following a 0.2% fourth-quarter return. Its most recent funding ratio was 119.7%.

 KLM’s €8bn pension fund for ground staff posted an annual profit of 9.3%, after a quarterly loss of 1%. Its coverage ratio was 108% at the end of December.

The scheme’s board said it had decided to cease its tactical asset allocation “as this had delivered insufficient returns”.

The assets of the three large KLM schemes are managed by Blue Sky Group.

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