NETHERLANDS - The €1.6bn pension fund for physiotherapists (SPF) has decided to lower its 2.5% fixed indexation payment, as the scheme had a cover ratio of 94% by the end of last year and a return of -14%.

Although it still granted its participants a total indexation of 3% on 1 January, it indicated in its annual report that given the mandatory requirement to recover its funding ratio to 105%, SPF has now decided to decrease the fixed element of its indexation to 2%.

In contrast, the scheme has doubled the conditional element of its indexation to 1%, subject to its financial position.

SPF said it expects the scheme to recover without raising contributions, as its premiums are already above the level needed to cover costs.

Looking specifically at last year’s asset allocation and returns, hedge funds was SPF’s the best performing asset class with a return of 12.5%. The scheme attributed its result to “commodity trading adviser (CTA) managers and global macro managers, who take up positions based on quantitative models or a fundamental view on markets”.

Besides the 0.8% return on investments in European infrastructure funds, all other asset classes showed negative results, and the 49% fixed income allocation returned -2.3%.

The Fysios scheme attributed a 44.4% loss on its equity portfolio - 3% short of the benchmark - largely to losses related to collateral on its securities-lending programme.

Equities underperformed in all areas, according to SPF, so it replaced its worldwide benchmark with regional ones in August last year.

The scheme’s 21% allocation to mainly European property returned -2.7%, while its 5% alternatives portfolio, which also include private equity and commodities, yielded -3.8%.

Its tactical asset allocation, which was introduced in August and focused on the UK and Canada, also generated a loss of 0.25%, SPF said.

The scheme made it clear, however, that it will stick with its investment policy for the next three years and continue to hold a strategic asset allocation of 20% equity, 45% fixed income, 20% property and 15% alternatives.

SPF also said it had covered three-quarters of its currency risk in US dollars and planned to hedge 50% of its interest risk liabilities, though it had yet to implement this move by the end of 2008.

The occupational pension fund has contracted out its pension management to Interpolis, and its assets are managed by Gorinchem-based Grontmij Capital Consultants (GCC) and Syntrus Achmea Asset Management (SAVB), which also acts as its assets administrator.

SPF has 25,550 participants, of whom 7,440 are deferred members and 2,050 are pensioners.

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