NETHERLANDS - The €2.9bn pension fund PNO Media is planning to spin off its services into a separate pension provider, so it can offer its members more than pension products.

The new co-operative organisation will not only look after PNO Media's pension arrangements, but will also be the provider of its health insurance scheme, which is also open to external participants, officials indicated.

The Dutch Pension Act does not allow pension funds to provide non-pension services, such as healthcare insurance. So funds such as the €200bn civil service scheme ABP, and the €86bn healthcare pension fund PFZW, earlier established separate pension providers, so they too could offer more than pension products, and acquire external asset management clients.

This latest move was announced as part of PNO Media 2009 results, which revealed the scheme achieved an overall return of 14.4% last year.

The actual return was dragged down 3.5% percentage points as a result of PNO Media's hedging policy, which equates to a 50% hedge on interest rate risks and a 100% currency hedge on the main currencies.

The scheme's 37% equity holding delivered a 33.8% return, whereas its 41% allocation to fixed income generated 14.4% on assets, and exceeded its benchmark by 4.8 percentage points. Alternatives, in contrast, generated an almost flat -0.1% return.

The pension fund did not make any changes to its strategic portfolio during the last quarter on 2009, but maintained its strategic asset allocation target of 36% equity, 39% fixed income and 25% in alternatives.

The pension fund's cover ratio rose last year from 88.1% to 98.1%, after taking into account a 4 percentage point provision for longevity risk.

An additional reserve - equal to one percentage point of the funding ratio - was also made "because our own observations indicated that participants with a higher insured pension live longer than those with lower pension rights," officials explained.

PNO Media has 372 affiliated employers. Its active participants total 14,900, with deferred members and pensioners numbering 14,375 and 6,610 respectively.

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