NETHERLANDS - The €4.5bn pension fund for housing corporations SPW has revealed it is facing a funding shortfall, caused mainly by the turbulent fall in the equity markets.

The scheme's cover ratio was approximately 103.4% just over a week a ago, according to a spokesman.

The scheme indicated on its website SPW's decreasing cover ratio hit the 116% mark - the required level for its financial reserves - on 10 October, based on the financial assessment framework nFTK.

The industry-wide pension fund had protected one-quarter of its 55%-strategic equity allocation through put options last summer, but given the market developments this turned out to be insufficient, the spokesman pointed out, adding the value of its equities has now dropped to 48%.

"SPW was less affected by decreasing long-term interest rates, as it had tactically hedged between 80% and 100% of interest risks through swaps," he continued.

The spokesman also said he expected SPW to introduce quarterly reports soon, "in order to keep its participants informed about developments".

The scheme has suffered a negative return of -9% so far in 2008.

Based on its present funding ratio, the pension fund present a three-year recovery plan to the pensions regulator De Nederlandsche bank (DNB), but though officials do not expect any policy changes it the moment while difficult market conditions persist.

"Virtually no policy is sufficient at present against the extreme conditions," according to the scheme, stressing solvency as a long-term investor is not in danger.

The pension fund's board will decide on the required level for contributions and indexation at the end of this year, based on the situation by then.

The Stichting Pensioenfonds voor de Woningcorporaties serves 515 affiliated companies and has 62,805 participants.

Last year, it granted its 33,050 active members a regular indexation of 2.8% as well as an additional inflation compensation of 3.2%. Deferred members and pensioners received an indexation of 1.65%.

Elsewhere, the €1.3bn pension fund for dentists and dentist specialists SPT announced a funding shortfall with a cover ratio of 104.2% at the end of the third quarter.

The occupational scheme has already decided that its financial position will not allow for any indexation during 2008.

SPT granted its 5,270 active participants and 2,460 pensioners an inflation compensation of 1.6% last year.