NETHERLANDS - Bpf Bouw, the €28bn pension fund for the Dutch building industry, increased its coverage ratio by 4 percentage points to 110.8% in the first quarter of 2011.
The scheme attributed the boost mainly to rising long-term interest rates, the criterion for discounting liabilities.
However, Bpf Bouw's extensive hedge of the interest risk on its liabilities - as well as its hedge of the currency and inflation risk - negatively affected its quarterly results.
Pension fund officials said a loss on the scheme's overlays of 2% cancelled out the 1.6% return on investments.
The industry-wide scheme for the building sector did not provide details of its hedge or the specific returns of asset classes.
At the end of August, falling interest rates - combined with an increased longevity forecast - caused funding to drop to 97.1%, while the fund's minimum requires a coverage ratio of 104.1%.
Bpf Bouw offers pension services to 825,000 employees and former employees in the building sector. Its has 14,500 affiliated companies.
The scheme's pension administration is carried out by Cordares, while APG and Bouwinvest manage its assets.