Sections

KPN to base benefits rise on prices not wages

Related images

  • KPN to base benefits rise on prices not wages

NETHERLANDS - The €3.4bn pension fund of telecoms giant KPN has decided to change its policy on inflation-linked benefits from 80% of the salary index to 100% of the price index.

Because of this change, its deferred participants and pensioners will receive a one-off one per cent extra compensation for inflation, on top of the regular indexation of 1.4%.

The scheme's active members have been granted an indexation of almost 1.2%.

The Stichting Pensioenfonds KPN reported an overall return on investments of 2.7%, while its cover ratio has risen by 6.3% to 137.8% at year-end.

The scheme made clear that its return has been affected by negative results of interest rate swaps of -1.6%, caused by the rise of long-term interest rates. In line with its policy - aimed at a total hedge of 53% - it has also hedged its interest risks through long-term bonds.

Mainly thanks to the rise of oil prices, commodities was KPN's best performing asset class, with returns of 30.5%.

Its equity investments yielded 4.8%, partly because of positive results of a hedge of the US dollar and the British pound, according to the scheme's annual report. Its 40.7% equity allocation is being managed through multi-manager funds, which hire specialist external asset managers.

KPN's fixed income portfolio - divided up into two passively and one actively managed investment fund - returned 1.1%.

To decrease its exposure to inflation, Pensioenfonds KPN has doubled its allocation to inflation-linked bonds to 10%, at the expense of bonds from the EMU area, the report said, adding that exposure to corporate bonds will by raised by 10% to 50%.

Property investments yielded 6%, with listed property and Asian non-listed property returning -28% and 29% respectively. Hedge funds returned 1.7%, while global tactical asset management showed a negative yield of -10.9%.

The KPN pension fund has 51,225 participants in total, of whom 19,745 are employees. The scheme has 20,910 deferred members and 10,570 pensioners.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • DS-2487

    Closing date: 2018-11-22.

  • QN-2489

    Asset class: Alternatives.
    Asset region: Global.
    Size: $100m.
    Closing date: 2018-11-30.

  • QN-2491

    Asset class: Alternatives.
    Asset region: Global.
    Size: $20m.
    Closing date: 2018-11-30.

Begin Your Search Here