Kappers, the €457m pension fund for hairdressers and barbers in the Netherlands, lost 0.7% on its investments last year due to the effect of rising interest rates on its fixed income holdings and interest derivatives.
On balance, its 37% matching portfolio of government bonds, interest derivatives and mortgages lost 12.2%, according to its 2013 annual report.
The largest loss – almost 17% – was produced by the scheme’s 28.6% allocation to government bonds and interest swaps, meant to hedge the interest risk on its liabilities.
Mortgages investments, on the other hand, returned almost 7.4%.
The pension fund’s 62% return portfolio produced an overall result of 7.8%, with its equity holdings (32.4%) generating a 14.8% return.
US and European equities returned 26% and 20%, respectively.
In contrast, the scheme lost 9% on its emerging market holdings, having recently increased the allocation at the expense of investments in Japan and Asia.
Kappers’ 9.5% property portfolio returned 0.34%, while its 20.6% credit allocation delivered 2.3%.
The industry-wide pension fund for hairdressers and barbers reduced its contribution from 8.6% in 2013 to 7.5% in 2014, while lowering its annual pensions accrual from 0.85% of salary to 0.81%.
To raise its coverage ratio to the minimum required level of 105.3%, the scheme had to apply a 2.8% rights cut last April, following a 7% discount last year.
At May-end, its funding stood at 109.7%.
The board said it expected that any new funding shortfall would be eliminated under a new pensions contract based on the financial assessment framework (FTK).
It added that it decided to pay its trustees and chairmen a fixed annual amount of €25,000 and €40,000, respectively.
The pension fund reported administration costs of €122,50 per participant and asset management costs of 0.45% of its assets.
At year-end, it had 20,750 active participants, 36,750 deferred members and 2,380 pensioners.