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Philips Pension Fund returns 5.2% in third quarter

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.

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