NETHERLANDS – The board at Shell's €21.2bn pension fund has expressed concerns over long-term uncertainty caused by continual changes in Dutch pensions legislation.

In its annual report for 2012, the scheme's chairman, Garmt Louw, said the pension sector needed "a stable framework that provides a clear view on the future pension results for both workers and pensioners".

The Shell scheme reported an annual return of 17% – including a 1.7% profit on its liability hedge through interest and inflation swaps – outperforming its benchmark by 1.3% percentage points.

It said all asset classes delivered positive returns, with an outperformance at almost all portfolios.

The 17.1% return on its 42% equity portfolio was mainly due to the performance of investments in Europe and Japan (21%) and emerging markets (18.6%), according to the pension fund.

It added that small caps generated the best results.

The Shell scheme attributed the 14.6% return of its 39% fixed income holdings in particular to falling interest rates and narrowing spreads.

It said the government paper of emerging markets and credit performed well, with returns of 19.5% and 16.7%, respectively, and that its liquid rates portfolio generated 12.8% on the back of strong results from peripheral Europe.

Its private equity investments returned 15.3%, mainly due to revaluations.

Hedge funds and non-listed real estate returned 4.9% and 10.4%, respectively.

The Stichting Shell Pensioenfonds said it decided to maintain the pension contribution at 45% of the pensionable salary, with the employer paying 41.6%.

It refrained from granting inflation compensation over last year, when its coverage ratio rose from 111% to 119%, 6 percentage points shy of its required financial buffer.

After the increase in funding, the scheme decreased the risk level of its investments, it said.

It said it also decreased its liability hedge from 30% to 20% in June, as a response to low interest rates.

The pension fund has 11,180 active participants, 19,585 pensioners and 6,460 deferred members.