NETHERLANDS - PGGM, the Dutch healthcare pension fund made a 10.9% return on its investments in 2004.
Its coverage ratio moved to 111%, higher than the expected 110% level set by the board for 2004, the scheme said in its annual review. Still, PGGM has still to manage an additional coverage ratio increase of nine percent as stated in the management plans in the next years.
Total investment capital increased from €52.9bn euros in 2003 to €59.9bn euros in 2004.
Bonds returned 6.3% while equities returned 12%. Private equity, real estate and commodities returned 16.7%, 12.6% and 20.9% respectively.
During 2004, the overall indexation was 0%, which was profitable to the results in general, even that the premium contributions were still lower than the total costs of pension payments.
PGGM has stated in its year report that the fund’s targets are to provide a high pension, based on average salary arrangements, and in principle with indexation and possibilities of Extra Pension.
The basis of a pension is still, according to PGGM solidarity and collectivity. The latter is shown in PGGM’s overall ambition to provide indexation and a relatively low and stable premium system.
To support its overall goals, based on a strategy approved by the Dutch Central Bank, PGGM is set on a recovery program in which has been indicated that the pension premium until 2006 has to increase to support a higher coverage ratio.
During 2004, premiums have been increased by 2.7 percentage points to 13% of salary. In 2005, premiums will reach 15.5% while 2006 will have a 17.5%.
The fund currently has 1,068,800 active subscribers, 216,400 pensioners and 1,899,100 deferreds.
This means that subscribers increased by 2.3% in 2004, at the same time total volume of pensioners increased by even more. The fund has around 17,300 employers as members.