Philips scheme sees continued negative return
NETHERLANDS - The Philips pension fund saw a further drop of its assets and a decrease of its cover ratio as a result of negative returns of -1.7% during the first quarter.
After a fall of its assets of €600m last year, its assets under management decreased by another €367m to €13.4bn during the first three months of this year, mainly because of the negative returns on the equity markets, the scheme said.
Its cover ratio also dropped by 6% to 131% during the same period, after a rise of 3% in 2007.
According to the pension fund, one-third of the decrease of its funding ratio can be attributed to its recent indexation promise of 3.5% for active participants and 1.9% for pensioners and deferred members.
The scheme's liability-matching portfolio - aimed at stabilising the pension fund's financial position by managing the interest risk - returned 1.9%, matching its benchmark, scheme officials said.
However, the return portfolio - focused on long-term indexation - delivered a negative yield of -8.7%, which fell 0.4% short of its benchmark, the scheme added.
The liability-matching portfolio mainly consists of fixed-income investments and mortgages, and comprises 67% of the scheme's assets.
The return portfolio, made up mainly of equity and property, contains the remainder of the assets of the Philips pension fund.
The scheme has 20,150 workers, 60,220 pensioners and 33,190 deferred participants.
Its total number of participants has dropped considerably, as the scheme has bought-out approximately 8,000 deferred members who were entitled to a yearly benefit of less than €400, it said.
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