NETHERLANDS - The €12.5bn pension fund of electronics giant Philips saw only a limited decrease to its cover ratio during the first quarter of this year, compared with other pension schemes, as a relatively large part of its assets were invested in fixed income.
Officials said the fund saw a 3.2% drop on its funding ratio to 118.4% in the first three months of this year, predominantly as a result to negative investment results, though the indexation of 3.5% and 1.45% it granted to workers and deferred members play their parts too.
The scheme's cover ratio was still way above its legally-required percentage of 106.8% by the end of March, officials stressed, although this is down on the 120% cover ratio it had at the end of 2008 and the 109% funding level needed at that time. (See earlier IPE story: Philips hits a flat note on pensions)
Philips Pensioenfonds has a significantly higher number of pensioners relative to its number of active participants, so three-quarters of its assets are invested in fixed income and fixed income-related investments, through its liability-matching portfolio.
The returns portfolio - consisting mainly of equities, commodities and hedge funds - continued to be hit by the market downturn and returned -3.7%, whereas the liability-matching portfolio yielded -2.4%, officials stated.
Despite losses, the returns of both portfolios remained within their respective benchmarks of -4.1% and -2.7%, officials argued.
The Philips pension fund has 19,150 active participants, 59,890 pensioners and 32,600 deferred members.
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