NETHERLANDS – The €14.9bn Philips Pension Fund posted a third-quarter return of 5.2%, leading to a year-to-date return of 9.5%.
The scheme’s 71% liability-matching portfolio outperformed its benchmark by 1.7 percentage points, returning 5.5% over the period.
It attributed its positive performance in particular to its French inflation-linked bonds.
The pension fund’s 29% return portfolio – consisting chiefly of equities, property and commodities – generated 4.4%, slightly short of the benchmark.
The coverage ratio increased by 6 percentage points to 105% due to the combined impact of the scheme’s quarterly performance and the introduction of the ‘ultimate forward rate’ as new discount rate.
The new discount rate added 2 percentage points to its funding, it said.
The minimum required coverage ratio of the pension fund is 104%, whereas its required financial buffers equate to a funding of 107%.
The Philips scheme said it would refrain from granting indexation as long as its coverage was less than the required financial reserves.