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ING pension fund bolsters coverage ratio with Q1 returns

NETHERLANDS – Equities and property were the main contributors to the 1.6% first-quarter return at the €20bn pension fund of Dutch banc-assurer ING.

Over the first three months of the year, it saw its coverage ratio rise by 3.5 percentage points to almost 122%.

The pension fund’s 23.5% equity portfolio returned 9.4%, largely thanks to “very well performing” developed markets, in particular the US, as well as low-volatility investments.

The pension fund said its emerging market holdings performed poorly due to a downward adjustment of growth perspectives and falling commodity prices.

The scheme’s 5.8% property allocation returned 4.8%, due chiefly to the performance of listed real estate, while private equity and hedge funds generated a combined return of 2.2%.

By contrast, following a slight increase of market rates, the pension fund incurred a 1.3% loss on its 67.3% fixed income allocation.

“However,” it added, “the result was in part offset by a decrease of the risk premium on credit.”

The pension fund attributed the 0.1% loss on its currency hedge to a slight gain of the US dollar on the euro.

The scheme stressed that it accounted its liabilities against market rates, as this provides “a better picture of our financial position”.

Under the current accounting rules set by supervisor DNB, using the three-month average of the forward curve with the application of the ultimate forward rate, the pension fund’s coverage ratio was 128.4% at March-end.

The ING scheme has more than 73,000 participants.

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