NETHERLANDS - The pension fund for Dutch pharmacy staff (PMA) has granted its participants full indexation of 3.25% as the scheme now has a cover ratio of 133%.

The €1bn industry-wide scheme follows the salary index for public pharmacies when deciding what its indexation should be, according to officials.

The financial assessment framework (FTK) allows pensions funds to pay full indexation if their cover ratio is over 130%. And PMA's indexation is also paid from the returns on investments, so is therefore conditional to the performance of the scheme.

Marcellino Kropman, director at PMA, said the estimated investment during the first nine months of 2009 were 12%.

This is a significant improvement on the previous year as the pension fund's annual report for 2008 reported PMA had suffered an overall return of -24.7% and its cover ratio had dropped from 208% to 112% during that time.

The scheme attributed its 47.8% equity loss in 2008 to State Street Global Advisers (SSgA) who, as manager of PMA's largest equity fund, had appointed collapsed bank Lehman Brothers as its prime broker.

"Without the need to do so, and without informing PMA, the asset manager had in fact provided the [investment] bank with the technical ownership of the securities," said PMA.

Kropman declined to provide further details about PMA's assets caught up in the Lehman Brothers' collapse but said the missing funds were not taken into account for establishing the scheme's assets at present.

PMA is one of the Dutch pension funds pursuing SSgA for compensation payouts, as officials allege the firm invested its assets in Lehman without informing them and without protecting the assets.

Bernard Verbunt of law firm Simmons & Simmons was last year preparing legal proceedings against SSgA on behalf of PMA, and estimated the pension fund's loss at that time to be "tens of millions of euros". (See earlier IPE story: Pharmacists to sue State Street for Lehman losses)

PMA is in the process of switching its asset allocation from a dynamic to a strategic allocation over a two-year period.

Officials announced last April that the fixed income allocation would be raised by 3% to 33% over two years, while the equity holding would be decreased by 5% to 45%.

At the same time, the scheme was planning to decrease its indirect property allocation by 1% to 17% and the remaining assets were being shifted into commodities. (See earlier IPE story: PMA recovery to alter asset allocation)

During the years 2007, 2008 and 2009, PMA granted its members compensation for inflation of 1.75%, 1.25% and 2% respectively.

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