NETHERLANDS - The €1.3bn Dutch pension fund for consumer goods company Sara Lee saw the combined effect of  a 6.2% return and the €25m sponsor recovery contribution, offset by further declines in the long-term interest rates during the first six months of 2012.

As a consequence, the scheme's funding decreased by 0.5 percentage points to 97.5%,  the fund said in its half-yearly report.

Almost all asset classes contributed to the positive result, with the matching and return portfolios generating 5.8% and 8.1% respectively.

However, the 21% hedge against exposure to the fund's main currencies caused a loss of 0.4 percentage points, according to the pension fund of the coffee and tea maker.

Last year, its 63.5% matching portfolio - meant to limit short-term risks - consisted of credits, long-term government bonds and interest derivatives.

The investments in equity, indirect property and commodities in its return portfolio, are to generate profits for indexation for the schemes 3,500 deferred members and 4,150 pensioners.

The pension fund said it has established a separate €62m financial reserve (TRA) - with an independent investment policy - for inflation compensation for its 1,950 active participants.

It added that the credits and inflation-linked bonds in the TRA have yielded 8.1% and 4.8% respectively during the first six months, resulting in an overall return of 7%.

Officials indicated that the scheme's funding must reach at least 100% at year-end, to avoid any rights cuts being imposed in December 2013.

That said, the report noted that the board could, on a discretionary basis, add TRA funds to the general pension assets and suggested that the sponsor might pay an additional recovery contribution to boost the funding ratio.

However, by the end of July, the funding of the Stichting Pensioenfonds Sara Lee Nederland had already climbed to 100.5%, excluding TRA assets.

The scheme must reach a minimum funding level of 104.2% at the end of 2013.