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Dutch pension giants report strong recovery

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  • Dutch pension giants report strong recovery

NETHERLANDS - Recovering equity markets and well-performing investments in listed property and high-yield bonds were the main contributors to a strong 8% recovery during the third quarter for pension funds PfZW, PMT and PME.

Quarterly returns of 9.1% - to give a cumulative result of 12.9% this year - lifted the healthcare scheme PfZW's assets to €81.9bn.

PfZW said during that time, its cover ratio has risen from 100% to 107%, after hitting an absolute low of 89% in the first quarter of this year.

Peter Borgdorff, managing director of the pension fund, said he is delighted that the cover ratio is improving faster than anticipated in the scheme's recovery plan, though he warned members against too much optimism.

"There may be further rapid changes in both the markets and long-term interest rates," explained Borgdorff.

The scheme said it will consider a partial compensation for inflation in 2010 as PfZW's funding ratio has risen above the 105% minimum required level of funding above which indexation can be paid.

The healthcare scheme said its best performing investments in the third quarter were liquid shares, public real estate and high-yield bonds, with returns of 14.1%, 21.6% and 9.9% respectively.

The interest rate hedge on 30% of its liabilities also contributed €500m to the quarterly result, according to a spokesman for PfZW.

The metal scheme PMT saw its assets rise to €31.7bn thanks to a gain between July and September of 9%, and its cover ratio improved from 92% to 97%.

The industry-wide scheme for metalworker and mechanical engineers reported its strategy had generated a 16.5% return on equities, while fixed income, property and alternatives yielded 8.3%, 3% and 2% respectively.

PMT officials also noted it is currently heading for a quicker recovery than forecast in its recovery plan, which aims for a funding ratio of 105% within five years.

And PME, the €20.6bn industry-wide pension fund for metal and electronic engineers, said it had returned 8.2% on investments in Q3, taking its cumulative returns to 10.7% this year.

PME's cover ratio rose by six percentage points to 101% during the third quarter.

According to PME, its increased focus on high-yield investments, because of their solid return prospects as well as their low-risk profile, contributed considerably to its quarterly results.

The metal scheme reported returns on equities and fixed income of 15.5% and 6.2% respectively, with property and alternatives yielded -1% and 2.3% respectively.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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