NETHERLANDS - Europe's largest pension fund, the 135.6 billion euro Dutch civil service fund Stichting Pensioenfonds ABP, showed an improvement in performance against its benchmark in 2002 over the previous year, an industry group says.

The Vereniging van Bedrijfstakpensioenfondsen, or Dutch Association of Industry-wide Pension Funds, said that ABP scored 0.64 in a test of Dutch pension funds' performance in 2002. In 2001, ABP gained a so-called "Z-score" of 0.52.

The 45.3 billion euro healthcare and social services fund PGGM, Pensioenfonds voor de Gezondheid, Geestelijke en Maatschappelijke, did less well in 2002. It had a Z-score of -1.41, down from -1.31 in 2001.

The VB said that of the 64 compulsory member funds in the association, just two failed to pass the performance threshold of -1.28. They were the pension funds for the agricultural and food supply industry and the tyre and wheel industry - although it did say that the funds achieved above-average yields in 2002.

"Z-scores measure the extent to which a fund has achieved the investment objective it has set for itself (the benchmark portfolio)," the VB said.

It said the benchmark portfolio is determined by the fund's board of management applying a risk profile based on studies of fund commitments relative to fund assets. It added that if a fund fails to hit the target of -1.28 over a "multi-year" period then employers are entitled to claim exemption from mandatory membership of the industry-wide fund in question.

But although the VB recognizes that the Z-score system is a useful tool, it sees limitations. It said the past year has shown that the present system is "overly static and inflexible".

"Standard or benchmark portfolios have to be established for an entire calendar year," the VB said. It said that funds have been forced to amend their policy - in part at the prompting of the Pensioen- & Verzekeringskamer regulator.

"However they cannot amend their benchmark portfolio because that is illegal," its states.

Separately, the PVK has now issued an English version of its White Paper on pension fund solvency requirements on its website at