NETHERLANDS - The €1.8bn pension fund Protector, of energy giant ExxonMobil, saw its cover ratio leap from 122.4% in 2008 to almost 168% in 2009, according to preliminary figures.
The scheme attributed the improvement not only to a 23.5% return on investments, but also to considerable financial support from its sponsoring companies, alongside rising long-term interest rates, which reduced liabilities by €51m.
Protector’s affiliated companies - ExxonMobil Netherlands, ExxonMobil Financial Services and ExxonMobil Chemical Holland - contributed an extra €704m over a 12-month period, according to the scheme.
Officials noted its improved financial position means the group could reclaim 50% of the additional contributions, following agreements made with the sponsoring companies.
That said, Jeroen Meerbach, Benelux pensions manager ExxonMobile, noted the pension board will also need to take into account the prospect of increased longevity when making any clawback decision.
“We need to make a well-considered decision, as paying back the additional contributions as well as the longevity issue could affect our cover ratio,” he stressed.
Protector’s required financial buffers equal a cover ratio of 134.4%. So given its financial position at the beginning of 2009, it was one of the few schemes which did not have to submit a short-term recovery plan to pensions regulator De Nederlandsche Bank.
Meerbach also indicated the risk attached to the pension fund had been decreased in the fourth quarter, as officials raised the fund’s fixed income allocation by approximately 10%, at the expense of its equity holdings.
“The equity portfolio has also been adjusted, in order to achieve a cost reduction and an increased spread of investments,” said Meerbach, who noted all assets are now managed under a passive strategy.
At the end of 2008, Protector had 57% of its assets allocated to equity, while its holdings in fixed income and property were 34% and 9% respectively.
Protector also said it will keep its contributions unchanged at 5% for any salary part exceeding €62,000, and it will take a decision on indexation next April.
The scheme, which has 5,100 participants, had reported a 26.8% investment loss in 2008.
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