Rate rise offsets returns
Rising bond yields were the bane of some Dutch pension schemes as the industry published its fourth-quarter and year-end results for 2010.
Despite positive and often double-digit growth for schemes in the Netherlands over a 12-month period, bond yield fluctuations between September and December resulted in losses of as much as 3.5% for the quarter.
Metal workers' scheme PME lost 3.2% in the period, while still managing to return 12.4% overall on the strength of growth across all its asset classes, while the country's largest private sector scheme PMT, with €37bn in assets, saw its equity portfolio grow by over 20%, allowing returns of 11.4%.
Juggernaut ABP, the second-largest European scheme next to Norway's Pension Fund Global and servicing public employees across a number of sectors, meanwhile, reaped rewards from its exposure to emerging markets as its portfolio returned 26.6%, only outperformed by close to 30% growth from private equity investments. Overall, ABP now manages €237bn in funds, following a 13.5% year-on-year increase.
Dutch healthcare scheme PFZW avoided losses in the fourth quarter, and while its returns for the period went to 1.3%, overall returns remained over 12%. This means that the scheme now manages close to €100bn in assets.
Danish pension industry was confronted with rising longevity predictions eating into financial reserves.
Having put aside an additional DKK23bn (€3bn) in mid-December to counteract the effects of the country's ageing population, ATP reported in its 2010 results that close to four-fifths of that additional funding disappeared.
Smaller player PKA increased its assets by more than 13% last year. Chief executive Peter Damgaard Jensen credited the scheme's exposure to domestic stock for some of the performance. It posted returns of 38.4%, outperforming Danish equities. The domestic stock portfolio also outperformed its overall equity portfolio by close to 15 percentage points.
Meanwhile, Switzerland's AHV returned 4.2%. The scheme said returns could have been stronger were it not for a 10% exposure to foreign currency, which it had not hedged completely.
The canton of Bern's Bernische Pensionskasse announced an overhaul of its asset allocation after seeing only 1.2% returns, which was below even the average 2% increase reported by a Swisscanto survey of schemes in the country.
Finally, Sweden's second buffer fund AP2 announced returns of 11%. Eva Halvarsson, the fund's chief executive, highlighted that its policy of shifting back to active management was paying dividends, while its lack of exposure to volatile foreign currencies enabled growth.