NETHERLANDS - PMT, the €37bn pension fund for the metalworking and mechanical engineering sector, saw its coverage ratio dip below 100% last year, as it was forced to take account of altered longevity calculations.
The industry-wide scheme was forced to include an additional 4% to its liabilities - on top of the initial 1.3% in 2009 - it indicated in its annual report over 2010, resulting in its coverage ratio falling to 96.8%.
The pension fund nonetheless stressed that it was still on its mapped out recovery path and had avoided a rights discount.
However, it conceded it was unable to offer indexation and had to increase contributions by 1.3 percentage points to 28.6% of pensionable salary. This increase will be followed by a further rise to 30.3% in 2011, it added.
PMT, which reported an overall return of 11.6%, kept its asset mix almost unaltered at 53% fixed income, 22.6% equity, 11.4% property and 13% alternatives.
Staff attributed the 9.6% return of its fixed income portfolio mainly to well-performing credits as well as to US and European high-yield bonds.
They added that inflation-linked bonds generated a loss, due to a sharply decreased inflation forecast.
Following a new specific swap spread-based country policy, PMT said it had divested almost all government bonds in Greece, Italy, Portugal and Spain, in favour of German, French and Dutch government bonds.
With a return of 20.3%, equity was the best returning asset class, while property generated 10.1%, mainly thanks its listed property investments.
According to the scheme, all asset classes in its alternatives portfolio contributed positively to the 8% yield of its alternatives holdings.
The metal scheme further made clear that it had appointed a risk manager, and had drawn up an integrated risk analysis. A new 'risk dashboard' has improved insight into the pension fund's financial risks, it said.
PMT's board indicated that it would look into the options of extending its communication with its participants to a pro-active approach, including an expansion into social media.
At present, the scheme is updating its participants through regional meetings as well as through personal consultations upon request.
With over 400,000 active participants, 655,000 deferred members and 172,000 pensioners, PMT is the largest pension fund for the market sector. It has almost 34,000 affiliated employers.