Coverage ratios at KLM’s three pension funds plunged over the first quarter despite their reporting strong investment returns over the period.
KLM Cabinepersoneel, the €2.8bn pension fund for cabin staff, returned 9.6% in Q1, yet its coverage fell by 4 percentage points to 117.1%.
Over the same period, Algemeen Pensioenfonds KLM, the €8bn scheme for ground staff, returned 8.6%, while its coverage ratio decreased by 3.1 percentage points to 117.4%.
From the beginning of this year, Dutch pension funds have had to use the 12-month average of their daily coverage, rather than the three-month average, to determine their ‘policy funding’, the new criterion for indexation and rights cuts.
Both schemes have failed to achieve their minimum funding targets of 126.2% and 124.6%, respectively, as stipulated under the new financial assessment framework (nFTK).
As such, they must now submit recovery plans to the pensions regulator.
Meanwhile, Vliegend Personeel, the €8.3bn pension fund for KLM cockpit staff, reported a 6.9% return and closed out the first quarter with a coverage of 127.5%, 3.1 percentage points down from December but above its minimum ratio of 123.4%.
All three KLM schemes have contracted out their asset management and pensions administration to Blue Sky Group.
In other news, Progress, the €5.8bn pension fund of Unilever, reported a quarterly return of 14%.
Progress director Rob Kragten said all asset classes, with the exception of commodities, made positive contributions to the scheme’s first-quarter performance.
He added that equities and private equity had performed particularly well.
Its funding of 139% at March-end equated with a coverage ratio in real terms of 103%, making Progress one of the best-performing large company schemes in the Netherlands.