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Dutch schemes lost 17% in 2008 - DNB

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  • Dutch schemes lost 17% in 2008 - DNB

NETHERLANDS - Dutch pension funds lost an average of 17% on investments in 2008, according to pensions regulator De Nederlandsche Bank.

Fixed income was the best performing asset class for the 656 schemes and delivered an average return of 3%, the watchdog said in its annual report.

The overall negative return on equity investments was 41.5% while property and alternatives did not fare much better, as the asset classes yielded -15.6% and -9.4% respectively.

Pension funds investing to their own risk requirements had combined assets of €575bn by the end of 2008, said the DNB, and fixed income was the largest asset class as it accounted for 52.8% of the combined asset mix.

Investments in equity, property and alternatives accounted for 31.5%, 11.2% and 4.6% of schemes’ assets respectively, the regulator also stated.

DNB’s yearly statistical survey also revealed 282 of the 656 Dutch pension funds had a funding shortfall and a cover ratio of less than 105% at the end of 2008.

The underfunded schemes represented a total of almost 4.9m participants, whereas only 24 pension funds - with 82,000 participants in total - had a safe cover ratio of over 130%, statistics revealed.

The watchdog suggested workers will see their pension claims and benefits rise by an average of only 0.2% in 2009, rather than the pension funds’ target of 3.7%.

Most workers and pensioners will not receive any compensation at all for price and salary rises, DNB said, adding pension contributions will rise on average from 15.1% to 16% of salary.

The regulator suggested this rise in premiums will be financed largely by employers with an individual company pension fund.

According to the supervisor’s statistics, pension funds’ liabilities totalled €697bn at the end of 2008, which is a drop of €66bn compared to the previous year.

Industry-wide schemes lost a total of €45bn, whereas company pension funds and occupational schemes saw a decrease of €17.5bn and €3.5bn respectively.

Of the 566 pension funds surveyed at the end of 2007, 464 had contracted-out their administration and 498 schemes had also placed their asset management with a third party, said the DNB.

And by the end of 2008, almost 50% of pension funds had set up their internal supervision, and a large majority had opted for a visitation committee which is tasked with checking the scheme at least once every three years, continued the DNB.

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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