NETHERLANDS - Dutch pension funds saw the value of their equity portfolios drop by another 6% in the first quarter of 2008 because of continued unrest on the financial markets, the Dutch central bank DNB said today.

The losses caused eight funds to contact the regulator about their ailing cover ratios, up from two funds in the last quarter of 2007.

In its latest statistical bulletin, the DNB says all equity categories were hit, causing exchange losses from €32bn, with equity portfolios' value dropping to €367bn at the end of the first quarter.

DNB said in the first quarter pension funds responded to the losses on equities by buying more shares worth €21bn, in a move to retain a certain asset mix.

These transactions were financed with the sale of €13bn worth of bonds, taking on short loans, as well as cash from loaned securities.

A spokesman for the regulator confirmed to IPE during that period a total of eight pension funds - seven corporate pension funds and one industry-wide fund - dropped under the minimum 105% cover ratio.

A funding ratio of less than 105% means the pension funds involved need to come up with a recovery plan to eliminate the shortfall within three years.

In the last quarter of 2007, there were two corporate pension funds with a cover ratio under 105%, up from one in the quarter before. There were no industry-wide pension funds with a cover ratio below 105% in the whole of 2007.

Earlier this year, the DNB wrote a public letter to pension funds warning them about the actions that need to be taken when the funding ratio drops below this point.

Joanne Kellerman, DNB director, indicated in April at least a handful of schemes were reported to be in this position, and there may be more yet to follow.

The developments have moved the watchdog to announce it will increase focus on risks, such as mistakes and imperfections in the build-up of pension rights, as well as financial consequences in technical provisions.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email