NETHERLANDS - PME, the industry wide pension fund for the mechanical and electrical engineering industries, said it saw its assets drop by 4.3% in the first quarter of the year.

Presenting its first quarter results, the pension fund also announced its cover ratio has dropped by 13 points to 122%.

PME-head Hans van der Windt, yesterday added his fund's voice to the criticism about FTK assessment framework made earlier also by the VB, commenting: "The violent movements in the cover ratio expose how the new FTK works."

PME also said its equity portfolio, amounting to 36% of its entire assets, performed worst with a negative return of -14.5% in 2008's first quarter.

But also the substantial fixed income portfolio (45%), and the 11% alternative portfolio showed a negative results of -0.4% and -1.8% respectively.

The fund's real estate investments, currently 8% of assets, was the only asset class to perform at 3.1%.

As IPE has already reported the metalworkers fund PMT saw its assets drop, with a negative investment return of -4.4%, to €32.9bn in the first quarter of this year, while TNT, the pension fund for postal workers, saw its assets reduce by over €100m, again driven largely by negative returns in the equities market. (See earlier articles on 'Share losses explode TNT returns' and 'Credit crisis hammered PMT')

PMT's cover ratio also dropped by 13 points to 128%, while TNT's cover ratios has dropped from 142% to 130%.

The Dutch regulator DNB warned earlier this month in a letter to pension funds that schemes need to implement a rescue plan if the cover ratio drops below 125%.

For PME however the relevant ratio is 119%, and not 125%, as the fund makes special provision to hedge interest and currency rate risks.

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