KLM’s three largest pension funds said they have benefited from improving equity markets, stabilising oil prices and “nearly stable” interest rates over the third quarter.
All three schemes – whose assets are managed by Blue Sky Group – reported rising coverage ratios on the back of quarterly returns as high as 3.5%.
The €2.9bn pension fund for cabin staff posted the best quarterly result, adding that its year-to-date return stood at 10.8% as of the end of September.
The Pensioenfonds KLM Cabinepersoneel’s fixed income holdings returned 1.7% over the period, while equities returned 4.8% and real estate 1.6%.
The results took the year-to-date returns for the three assets classes to 9.3%, 4.8% and 4.6%, respectively.
The scheme’s interest hedge resulted in 4 percentage points of return over the past three quarters.
Meanwhile, the €8.1bn pension fund for KLM ground crews returned 3.1% in the third quarter and 10.2% over the first nine months of the year.
Its funding rose by 0.7 percentage point to 102.4% as of the end of September.
Although its official policy coverage – the twelve-month average of its funding, and the criterion for rights cuts and indexation – dropped just below the required minimum level of 104.2%, the board of the Algemeen Pensioenfonds KLM said it saw no reason for a review of its asset allocation or de-risking measures.
It pointed out that it only recently abandoned its tactical asset allocation while at the same time deciding to slightly reduce its emerging-market equity allocation.
Lastly, the €8.3bn Pensioenfonds Vliegend Personeel KLM reported a quarterly return of 2.6% and a year-to-date result of 7.1%.
While the pilot pension fund’s coverage improved over the third quarter, its policy funding fell by 2.1 percentage points to 115.5%, 8.3 percentage points short of its required financial buffer.
The airline and VNV, a union for pilots, are locked in a legal dispute over whether the employer is obligated to plug this funding shortfall.
The Pensioenfonds Vliegend Personeel KLM is also preparing a lawsuit against KLM after the airline cancelled the contract as a result of the same dispute.