All of the five largest pension funds in the Netherlands achieved positive returns of between 7.5% and 8.7% in 2024, thanks mainly to double-digit gains on listed equities. For bonds, returns were significantly lower: two funds even suffered losses on their government bond portfolios, despite falling interest rates.
ABP, PFZW, PMT, Bpf Bouw and PME all made returns of around 20% on their listed equity portfolios.
These were somewhat lower than the 25% gain of the MSCI All Country World Index in euro terms, which can be explained mostly by the fact that the funds in question hedge most of their currency risk. The dollar rose by 6.6% versus the euro in 2024.
The funds’ total returns were markedly lower, ranging from 7.5% for construction scheme Bpf Bouw to 8.7% for technology industry fund PME.
Returns for all other asset classes were indeed significantly lower. For example, civil service scheme ABP and Bpf Bouw were the only funds with a double-digit return on private equity. The other funds had to make do with returns of around 4%.
Real estate returns also remained poor, especially for PMT and PME, achieving returns of less than 1%. Returns on unlisted property were even negative in many cases.
Negative returns despite falling interest rates
Interest rates also fell slightly in 2024, which had a negative effect on funding ratios. Normally, a positive return on the matching portfolio compensates for the effects of a fall in interest rates, but this mechanism did not work equally well for all pension funds last year.
PMT and PME achieved positive returns on their portfolios of government bonds and swaps, but ABP and PFZW suffered losses on these despite falling interest rates.
Equities | High-yield bonds | Matching portfolio | Real estate | Private equity | Total | |
---|---|---|---|---|---|---|
PMT | 19.7 | 5.3 | 6.8 | 0.4 | 3.2 | 8.2 |
PME | 20.1 | 4.6 | 4.2 | 0.8 | 4.9 | 8.7 |
Bpf Bouw | 18.8 | 4 | 6.3 | 7.5 | ||
PFZW | 18.6 | 5.6 | -1.2 | 1.6 | 4 | 7.7 |
ABP | 21.9 | 3.1 | -0.2 | 5.5 | 14.8 | 8.6 |
This is because the latter two funds invest relatively heavily in long-term government bonds.
“Yields on long-term safe government bonds rose during the year, partly because central banks made their interest rate cuts later than expected. This resulted in negative returns,” said PFZW chair Joanne Kellermann, adding: “Swap rates actually fell, partly due to strong demand from pension funds, and made a positive contribution.”
As a result, the spread between government bonds and swaps rose to record levels in recent months.
Agnes Joseph’s proposal
Bpf Bouw is the only one of the five major funds not to criticise Agnes Joseph’s recent proposal for a ballot on the pension fund level on the defined contribution (DC) transition.
The other four funds have not hidden their disapproval. For instance, Kellermann said she was “unpleasantly surprised that the rules of the game are being called into question again.”
Moreover, the proposal is “extremely complicated and costly” and contradicts the principles of the pension agreement, she added.
According to PME, Joseph’s proposal “knowingly torpedoes” the stability needed for a successful transition.
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