NETHERLANDS - Dutch pension funds saw their funding rates decline last year despite a much healthier investment return, the central bank said.

“As shown by DNB data, pension funds realised good results on fiscal 2004 – almost €70bn, against €11.2bn in 2003,” De Nederlandsche Bank said.

“Still, as a result of the downward trend in capital market rates, funds’ funding rate at market value declined (from 130% to 124% in 2004).”

Using the former fixed rate system, the funding rate would have increased from 114% to 121% in 2004, the DNB added.

The new Financial Assessment Framework, or FTK, will in future require funds to calculate their funding rates using market rates.

Pension funds have been battling to improve their financial positions following the 2000 stock price crash. Higher contributions and the renegotiation of pension schemes from final-pay based to average-pay based funds.

“Average-pay based schemes currently apply to three in every four active members,” said the release.

Earlier this month the DNB postponed the implementation of the FTK for pension funds until 2007.