NETHERLANDS - PMT and PME, the industry-wide pension funds for Dutch metal workers, saw their cover ratios drops from 100% to 98% and 99% respectively in the first quarter of this year, despite strong gains from equities and fixed income.
Decreasing long-term interest rates has increased the schemes' liabilities, even though equities and fixed income were the main contributors to their first quarter returns, delivering 4.5% to PMT and 5.1% to PME.
PME has already pulled its cover ratio back from a low of 84% in February 2009, and has recently changed its board structure to help achieve this. (See earlier IPE story: Hard-hit PME changes board structure)
PMT has recovered well too as its cover ratio dropped to as low as 80% in February 2009. (See earlier IPE story: PMT ups contributions to tackle shortfall)
PMT, €34.4bn the industry-wide scheme for metalworking and mechanical engineering, said its equity and fixed income investments in the first three months of this year were 7.3% and 4.1% respectively, whereas its property and alternative investments generated 3.3% and 1.8% returns respectively.
At the end of the first quarter, PMT had allocated 24% of its assts to equities and 52% to fixed income while the fund has 11% of its assets in real estate and 13% in alternatives.
This follow a strong year of performance for PMT's equity holding as its allocation delivered 39.3% on investments while fixed income returned 19.3% last year. Real estate investments lost money in 2009, after returning -2.8% while alternatives generated a 11.7% return.
PME, meanwhile, said its 59% allocation to fixed income was the best performing asset class as it generated a 6.6% return in Q1 2010.
Its 22% equity allocation also returned 6.4% for the €24bn metal and electro-technical engineering industry schemes.
PME's property and alternatives portfolios returned 1.1% and -2% respectively.