NETHERLANDS – The large Dutch metal schemes PME and PMT conceded that they are facing new rights cuts in 2014 unless financial markets markedly improve.
Gerda Smits, spokeswoman for the €31.6bn PME, which suffered a 3% loss on investments over the second quarter, said: “Based on the current figures, we would need to decrease pension rights by 5%.”
The pension fund saw its funding fall by 4.9 percentage points to 96.6%, while its assets dropped by €1bn.
Commenting on the quarterly results, Frans Willem Briët, PME’s chairman, described the prospect of avoiding a new rights discount as “gloomy”.
Last April, PME decreased pension rights by 5.1%.
Meanwhile, the €46.7bn metal scheme PMT acknowledged it was 4.7 percentage points short of recovery target after reporting a 4.8-percentage-point drop in funding to 96.3% over the period.
Its coverage ratio must be at least 104.3% at the end of this year.
Jan Berghuis, PMT’s chairman, admitted a second rights cut in 2014 might be inevitable.
“After the discount of 6.3% last April, this would be disastrous,” he said.
The largest metal scheme lost 2.8% on investments in the second quarter.
Its equity and fixed income holdings incurred losses of 2.5% and 4.2%, respectively, while alternatives and property returned 2.7% and 0.4%.
Over the second quarter, the coverage ratio of the €37.2bn pension fund for the building sector BpfBOUW dropped by 5.3 percentage points to 103.9%.
However, with its current funding, BOUW is just 0.2 percentage points short of its required coverage of 104.1%, according to Franck Erkens, its spokesman.
He added that a recent increase in returns and interest rates had pushed BOUW’s current funding to “a couple of percentage points” above its required coverage.
BOUW reported a quarterly loss of 3%, attributing 1.3% percentage points of that to the effect of rising rates on its interest hedge.
While BOUW’s holdings in equity, fixed income and alternatives produced losses of 2.5%, 1.8% and 3.1%, its property portfolio returned 0.9% profit.