NETHERLANDS - The combined effect of decreasing long-term interest rates and increased longevity almost wiped out a 13.6% return on investment for Dutch pension fund PNO Media, leading to a net return of 1% last year.

The €3.2bn media scheme saw its coverage ratio rise by 1 percentage point to 99.1%, which is ahead of the mapped out short-term recovery plan of achieving 104.3% by 2013, according to its annual report.

In order to recover its financial position fully, PNO Media said it was considering scaling back its indexation goals, as it had already lowered its earlier forecast for returns, as well as for the interest level, the criterion for discounting liabilities.

As a consequence, the board said it would conduct a full review of its policy on contributions, indexation and investment for the long-term recovery process.

With a return of 22.9%, private equity was the best returning asset class, while PNO Media's 4% allocation of commodities derivatives generated 16.3%.

The scheme said its equity portfolio - consisting of 36% of its assets - returned 20.6%, adding that it has raised its allocation to emerging markets at the expense of Europe, the US and Asia.

The 40% fixed income holdings delivered 5.3%, with emerging market bonds returning 24.2%.

Last year, the pension fund raised its hedge of the interest risk on its liabilities from 45% to 49%, while keeping the currency hedge at 90%.

Officials said PNO Media had started talks with the €11.3bn pension fund for the printing industry for a joint bureau for board support and strategic co-operation.

Earlier this year, the scheme announced its intention to merge with the €152m pension fund for the film and cinema sector.

Since last year, PNO Media has contracted out its asset management to its new independent provider Media Pension Services (MPD).

The media scheme has 373 affiliated companies and more than 36,000 participants and pensioners in total.