Falling interest rates and rising liabilities as a consequence have taken their toll on KLM’s largest pension funds in the Netherlands over the first quarter of the year.

KLM’s €7.9bn pension fund for pilots returned 1.3% over the period, yet its funding fell by 9.4 percentage points to 112.6%.

As a result, the Pensioenfonds Vliegend Personeel’s official policy funding – the average coverage over the 12 months previous, and the criterion for indexation and rights cuts – fell by 2.1 percentage points to 120.8%.

That figure falls 1.3 percentage points short of the scheme’s required financial buffer.

KLM’s €7.6bn pension fund for ground staff reported a first-quarter return of 3.1%, citing a 4.7% return on its government-bond allocation and a 0.5% return on real estate.

It lost 2.2% on equities.

The Algemeen Pensioenfonds KLM closed out the first quarter with a coverage ratio of 101.8%.

It said it moved to shore up its deteriorating financial position by shifting the concentration risk of its inflation-linked bonds across more countries.

It has also started investing in residential mortgages, together with its two sister schemes.

The pension fund for ground staff has established a dedicated committee for “investment matters” that has been tasked with “strengthening the board’s grip on the investment process”.

The new body is to operate as the link between the scheme’s board and the investment advice committee, covering all three KLM schemes, according to Erik Voorhoeve, the pension fund’s secretary.

He added that KLM’s other two large pension funds were also considering setting up similar committees.

According to the pension fund, the committee came as a consequence of a recent investment survey conducted by the Dutch regulator.

Meanwhile, KLM’s €2.6bn scheme for cabin staff, Cabinepersoneel, said that, despite having produced a first-quarter return of 3.5%, its funding fell by 8.2 percentage points to 98.1%.

The pension fund achieved positive returns on bonds (3.9%) and property (0.8%) but lost 2.1% on its equity holdings.