NETHERLANDS - The €1.8bn occupational pension plan for physiotherapists, Stichting Pensioenfonds voor Fysiotherapeuten (SPF), has slashed its unconditional indexation by 20% to raise its coverage ratio.

The decrease of its fixed indexation from 2.5% to 2%, combined with its 11.7% returns in 2009, led to a funding ratio increase of 24 percentage points to almost 118% at year-end, according to its annual report.

The result even enabled the scheme to grant its 26,150 participants an additional 1% conditional compensation for inflation, it said.

However, the scheme's coverage ratio has decreased to just over 101% in June, after including provisions for increased longevity and 2% unconditional indexation, a spokesman said.

He said the pension fund for physios applied an unconditional indexation to prevent new entrants from profiting from conditional indexation for which they had not paid.

However, participants have the option to increase their pension rights voluntarily by paying an additional 11%, 22% or 33% of their mandatory contribution.

SPF attributed the 34.6% return on its equity portfolio largely to a strong outperformance in Europe and the US in particular.

Its fixed income holding of 45.7% returned 13.4%, with the scheme profiting considerably from undervalued company loans, after having divested government bonds.

The scheme said its investments in direct and indirect property generated an 8.4% loss, falling 5 percentage points short of the benchmark, after its decision to spread its holding over sectors, managers and geographical regions.

It added that its tactical asset allocation and country policy - with an underweight position in Japan - had contributed 0.06% to the pension fund's total return.

Infrastructure and commodities returned 1.6% and 19.8%, respectively.

Officials attributed the 1.7% on hedge funds to disappointing results of its commodity-trading advisers manager, who had also taken up future positions in currencies, fixed income and equity.

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