NETHERLANDS - Dutch pension funds' coverage ratios have risen by 3 percentage points to 97% on average since the end of the third quarter, according to the pensions supervisor (DNB).

It attributed the improvement to rising equity markets and an increase in long-term interest rates, the criterion for accounting liabilities.

During October and November, the AEX and MSCI World indices rose by 7% and 6.8%, respectively, while 15-year interest rates increased from 2.9% to 3.1%.

At November-end, 261 pension funds - with 5.3m active participants and 2.5m pensioners in total - had a funding of less than the required minimum of 105%, the DNB said.

The watchdog also announced that Dutch pension funds and insurers had generated returns of 11% and 10% on German and Dutch government bonds, respectively, during the third quarter.

During this period, the value of these bonds increased by €16bn, according to the regulator's statistical news bulletin.

The DNB said the combined investments in government bonds of the euro-zone of pension funds and insurers amounted to €290bn at the end of the third quarter.

It also said institutional investors had further re-arranged their fixed income investments in the euro area.

During the third quarter, they acquired a total of €11bn of government bonds from the Netherlands, Germany, Austria and Finland, while offloading bonds from France, Italy and Spain.

The DNB said government bonds from the euro area accounted for nearly a quarter (23%) of the combined investment portfolios of pension funds and insurers at quarter-end.

Government bonds from outside the euro-zone - mainly from the US and UK - represented just 2% of investments.