NETHERLANDS – Dutch telecoms firm KPN says its pension schemes have cut exposure to bonds to boost long-term performance.
“Although the actual coverage level increased, the total reserve deficit increased to 347 million euros as of March 31, 2004 (December 31, 2003: 305 million euros) as a result of a change in the strategic asset mix to improve longer term performance,” KPN said in its first quarter earnings release.
A spokeswoman said the new strategic allocation means fixed income exposure will decline to 50% from the current 60%. “We have increased our exposure to equities,” she said. The allocation to real estate was also raised.
“The funding agreement between KPN and its pension funds obliges KPN to make additional payments in case of a shortfall,” the company said.
“In 2005, KPN has to pay 20% of any shortfall at December 31 2004 on top of the regular pension contributions.”
KPN’s asset mix has changed over the years. In mid-July 2002, it cut its equity investments to take its holding in the asset class below 30%. At the end of 2001, 56% of its portfolio was in equities.
KPN reported a first-quarter post-tax earnings or 375 million euros. It recently said that chief financial officer Maarten Henderson would at the end of 2004.