Dutch pension funds have returned net yields of 16.7% on average in 2019, said LCP, which surveyed 199 pension funds, concluding that all schemes had achieved positive results, ranging from 7.4% to 30%.
It said the figures included 5.9 percentage points of gains on schemes’ interest hedge, and represented a weighted average.
The unweighted average of 18.4% indicated that the largest pension funds had generated lower returns, it added.
According to LCP, pension funds’ annual results comprised 10.8 percentage points of securities, mainly equity and real estate.
Last year, pension funds’ combined assets rose by €240bn to €1.56trn, offset by €1.5trn of liabilities.
In 2018 and 2017, weighted average results were -1.2% and 5.7%, respectively.
LCP found that, with weighted returns of 15.3% on average, company pension funds had performed less than occupational schemes (18.8%), sector pension funds (17%) and general pension funds (17.5%).
Jeroen Koopmans, partner at the consultancy, explained the difference by noting that large company schemes often invested slightly more defensively than other pension funds.
The pension fund for wholesale firm B&S and the Ortec unit at PGGM’s consolidation vehicle Volo were the best performers, delivering returns of 30%.
The schemes for the travel sector (Reiswerk), the recreation industry (Recreatie) and for millers (Molenaars) followed closely, generating almost 28%.
Statistics produced by supervisor De Nederlandsche Bank (DNB) suggested that the high returns were largely thanks to above average gains on schemes’ interest hedges.
Koopmans said that, despite the high returns, funding of pension funds had hardly improved.
“They seem to need high returns in order to catch up with rising liabilities caused by dropping interest rates,” he said.
Annual returns for pension funds Stipp and Flexsecurity, as well as the Geveke section of the multi-company scheme Pon, didn’t exceed 8%.
The pension funds of British American Tobacco and Nedlloyd saw their assets rise by approximately 10%.
Koopman said funding of all five schemes was above the minimum required level, and that their investment profile was quite defensive.