KLM’s three main pension funds generated returns of up to 3.5% over the second quarter on the back of positive results on all asset classes.
The investment returns, however, failed to offset the negative impact of falling interest rates on liabilities, resulting in a slight drop of the schemes’ coverage ratios.
By contrast, their policy funding – the 12-month average of their coverage, and the main criterion for rights cuts and indexation – fell by almost 3 percentage points.
As a consequence, Cabinepersoneel, the €2.7bn pension fund for cabin staff, saw its policy coverage decrease to 102.8%, causing a funding shortfall.
Vliegend Personeel, the €8.2bn scheme for pilots, said it failed to meet the required financial buffers by 1 percentage point, after its policy funding dropped to 117.9%.
Cabinepersoneel reported quarterly returns of 3.2%, 1.8% and 0.6% on fixed income, equity and real estate, respectively, and said its interest hedge added 1 percentage point to its return of 3.4%
The pension fund’s return year to date is 7.2%.
Algemeen Pensioenfonds KLM, the €7.9bn scheme for ground staff, posted second-quarter and first-half returns of 3.5% and 6.9%, respectively.
During the last quarter, its fixed income, equity and real estate portfolios returned 4.1%, 1.9% and 0.5%, respectively.
Funding, as of the end of June, stood at 101.7%.
The pilots pension fund produced second-quarter and first-half returns of 2.6% and 4.2%, respectively, while its coverage ratio stood at 112.5% as of the end of the quarter.
In other news, Vervoer, the €23bn sector scheme for private road transport, has returned 15.8% year to date.
As a result, its funding increased by 1.3 percentage points to 99%.
The €3.3bn Pensioenfonds TNO, meanwhile, has returned 8.2% on investments year to date, attributing the result largely to its fixed income holdings, which returned 12.2%.
It incurred a 2.9% loss on equities, however, while producing neutral results on property and private equity.
The research institute’s scheme said its interest and currency hedges had contributed 0.9% and 0.2%, respectively, to its first-half performance.
It closed the second quarter with a funding of 105.6% and a policy coverage of 107.9%.