NETHERLANDS - The financial position of Dutch pension funds in 2003 has improved “significantly” compared with the year before, the Dutch central bank DNB has said.
DNB, which now also functions as the pensions watchdog, said it had come to this conclusion following an analysis of the financial health of 382 pension funds in the Netherlands which were all hit by the gloomy stock market climate in 2001 and 2002.
Following guidelines set out by the former pensions watchdog PVK in September 2002, Dutch pension funds struggling with their financial health now regularly have to submit plans to the regulator aimed at improving their financial position and coverage ratios.
The DNB had asked 382 funds to evaluate their financial health for the year 2003. Following an analysis of the material, DNB concluded the financial position of the funds showing deficits in 2002 had “improved significantly” in 2003.
DNB said the number of funds struggling with low coverage ratios had fallen from 190 in 2002 to 46 in 2003. The bank said the number of pension funds with reserve deficits had dropped by 100 to 287 at the end of 2003.
The bank said improved stock markets, changes in pension schemes, investment policy, indexation policy and premiums were the main factors behind the improvements.
Elsewhere, the pension funds of Dutch telecoms giant KPN and the Dutch postal service TPG reported strong investment yields - of 8.4% and 8.8% respectively - over 2004. Both funds, whose assets are managed by TKP Investments, said its equity portfolios had performed particularly well in the last quarter of the year, while the third quarter had seen the worst performance of the year.
At the end of 2004, the TPG pension fund had invested E1.58bn in equities, compared with E1.16bn for KPN.