NETHERLANDS - ABP and PFZW, the two largest Dutch pension funds, have dismissed suggestions from television programme Zembla and Bureau Bosch Asset Consultants that underperformance by the pension sector has lead to combined losses of €145bn over the last 20 years.

The programme suggested that, if contributions had not been lowered - and financial buffers not been partly paid back to employers during the good times in the 1980s and 1990s - the combined assets would have equated to 240%.

Pension funds should have stuck with safe fixed income investments, rather than extensively investing in equity, they said.

Hans ten Brinke, spokesman for the €237bn civil service scheme ABP, said: "Our yearly return of 7.1% on average since 1993 is much higher than returns on government bonds would have been and is in part thanks to our equity investments.
"Bureau Bosch should not have applied the MSCI Europe index as equity benchmark, as pension funds are investing worldwide."

He added that Bosch's assumptions for the combined equity investments of more than 60% were too high.

"Our portfolio comprises no more than 33% equity," he said.

The long-term asset mix of the civil service scheme, which reported a 13.5% return over 2010, comprises 40% fixed income, 33% equity and 8% property, as well as 14% 'other securities'.

ABP further underlined that recovering markets in 2009 have already fully compensated for the 20% losses during the previous year.

It said looming legislation for creaming-off all financial reserves over 115% was an important reason for lowering contributions as well as restitution of pension assets to employers in the 1980s and 1990s.

ABP also made clear that it questioned the €20bn 'implementation losses' - as indicated by pension supervisor De Nederlandsche Bank - by the pension sector in 2008, when the sector as a whole lost €200bn on investments.

The scheme said: "Apart from stating that their calculations were based on a 'sector-wide analysis', the DNB hasn't made clear how it came to this figure."

ABP further underlined the pension funds' difficult position, with coverage ratios strongly affected by interest rate volatility, increased longevity and the dynamics of financial markets.

Meanwhile, Bram van Els, spokesman for the €100bn healthcare scheme PFZW, said: "We are wondering whether the calculations of Bosch and Zembla are correct, and whether they have drawn the right conclusions."

PFZW's calculations show a return of 8.4% on average during the past 20 years, he said.

"This is much higher than the S&P 500 and 10-year Dutch government bonds of 6.9% and 5.3% on average during the same period," he added.

According to PFZW, Zembla and Bosch have failed to show that without lowered contributions and early retirement schemes such as VUT, pensioners and participants would currently have been less well off financially.