NETHERLANDS - SPT, the ailing €1.4bn pension fund for dentists in the Netherlands, saw its coverage ratio rise from 88% in September to 99.3% at year-end on the back of a 7.1% return during 2010.
However, despite the improved funding, the dentists' scheme is still 3.3 percentage points short of the target in its recovery plan, according to its preliminary annual report.
The closed scheme has already factored in a benefits cut of more than 10% on 1 July, largely due to rising longevity, which is having a larger impact on its members than on the average Dutch citizen.
While the fund stressed that the recovery goal was still achievable, it conceded that further cuts were possible in the event renewed turmoil in financial markets.
Since the end of April, SPT has been governed by Erik van Houwelingen.
Van Houwelingen was appointed administrator following the sacking of the scheme's board by its occupational pension association BPVT in a dispute over a new governance structure.
He has been tasked with guiding SPT back to normality by assisting its stakeholders in determining a sustainable governance set-up, as well as appointing a new board.
SPT said its equity investments returned 16.4%, while its fixed income holdings returned 2.9%.
Officials noted that the combined effect of its hedge of interest risks on its liabilities, currency risks and risks on part of its equity holdings had resulted in a loss of 3.1 percentage points.
However, following a new asset-liability management study, the scheme decided to limit its equity hedge to a "very substantial" market decrease.
In addition, it will only hedge a substantial drop in interest rates if rates drop below 4%, it said.
SPT has outsourced its administration to ING subsidiary AZL. Its asset management is carried out by ING Investment Management.