Real estate top performer for Dutch schemes - OPF
NETHERLANDS - The Dutch foundation for company pension funds, the OPF, says real estate has been the top performing asset class of its 140 member schemes.
The annual results of the schemes, which have combined assets of €110bn, ranged from 4.1% to 16.1% - with real estate yielding an average 12%. The returns on equity and fixed income were nine and seven percent respectively.
According to the OPF, the hedging of currency against the falling dollar has considerably affected the results. “It could easily have led to more than one percent extra return.”
It said: “Based on the fixed interest rate of 4%, the coverage ratios of the pension funds have improved. Company schemes with a buffer shortage will at least be on the road to recovery.”
Based on the future FTK rules from pensions regulator DNB, which dictate the valuation of liabilities at market rates, the coverage ratio has fallen slightly.
The 10-year results of OPF member schemes range between 11.3% and 4.3%. The returns over the past five years vary from +5.8% to -2.1%.
Meanwhile, the OPF’s board has spoken out in favour of a split between advisory and certifying tasks by actuaries. “They shouldn’t check their own work,” said director Jeroen Steenvoorden. “But the separation should be limited to personal level. Advising and certifying by the same consultancy must remain possible.”
He stressed the importance of regulation by the sector itself. “If it doesn’t happen, the regulator will set new rules.”
The extra costs of split tasks, which have been estimated by the Actuarial Society at 15%, haven’t put the OPF off. “As this helps preventing future major incidents, there will be revenues as well,” Steenvoorden explained.
The decision of OPF is part of a debate – initiated by pensions regulator DNB – about the undesirable combination of both roles. Actuaries produce calculation models for pension funds and insurers. But for the certification of those schemes DNB relies heavily on the same actuaries.
The Dutch Association of Industry-wide Pension Funds, or VB, has already decided in favour of a separation of tasks.