NETHERLANDS- Dutch funds have taken a battering in the last eighteen months and have lost a combined e79bn since the beginning of 2001 according to the seventh and latest edition of the Bureau Bosch fund manager survey.
Says author of the report Frits Bosch: “2002 will be known as the year of the financial landslide for Dutch pension plans. It is only about one and a half year ago that pension plans discussed what to do with surpluses. Now they discuss what the additional payments should be to keep the plans afloat.”
According to the survey, poor market conditions have wiped e47bn off the value of Dutch funds so far this year, compounding last year’s loss of e32bn. Dutch funds piled into equities during the 1990s, a move that has exacerbated the plunge.
Bureau Bosch’s report paints a fairly bleak picture saying that increased premiums are doing little to offset the losses. It quotes figures from PVK, the Pension and Insurance Chamber, suggesting 40 of the country’s schemes are now in deficit or below a 100% coverage level.
A fifth of the country’s 980 plans have a coverage ratio between 100% and 110% and PVK estimates it would take additional premium payments of anywhere up to e25bn to bring plans into what it calls “safer water.”
Bureau Bosch’s report says that markets need to rise 70% to abolish the deficits. It adds that a rise of 25% in equities would still leave almost one in five corporate schemes with a funding level below 110%.
Frits Bosch says a lot of the debate at the moment is on better management and how best to avoid plummeting asset values in the future. “Pension plans are compelled to become even more professional in their decision making process and this could be regarded as one of the few positive aspects of the present slump,” he says.