NETHERLANDS - With returns of 29.3% and 29.1% respectively, equity and real estate were the main drivers behind a 14.7% annual return last year at the €2.9bn pension fund of industrial group Stork.
Fixed income yielded 9% while the returns on alternative investments came in at 14.2%. The total results were up by 5.2%, compared to 2004, and exceeded the benchmark by 2.5%.
Last year, the scheme started adjusting its investment policy to the new financial assessment framework, or FTK. In order to minimize the impact of interest changes to pension liabilities, it has extended the average duration of its fixed income assets to at least 10 years, it said.
In addition it started the build-up of a strategic portfolio of interest-rate swaps.
The outcome of an ALM study of the scheme’s new risk profile, made the pension fund to decide to leave its strategic asset mix unchanged at 45% fixed income, 35% equity, 15% real estate and 5% alternatives, it added.
The pension scheme has still to decide whether it will adopt the principles of the FTK, which are optional for 2006, it said.
Its coverage ratio has risen to 123% based on the fixed rate of 4%. The mark-to-market approach – as prescribed by the FTK – would leave it with a funding ratio of 114%.
Stork’s scheme announced an indexation of the pensions claims by 0.7% this year, which is a discount of the price index and the salary index of 0.68% and 1.06% respectively.
The recovery of its reserves – as put down in the 2003 recovery plan – has materialised much faster than expected, the pension fund stated.
In order to achieve a greater involvement of board members with the investment process, the board has established a 4-strong investment committee, which will be assisted by 3 external experts.
The total assets of the fund rose €281m. The scheme has 12,625 active members, 25,784 deferred members and 14,853 pensioners.