NETHERLANDS - The pension fund of Dutch postal firm TNT has become the latest scheme to blame falling interest rates for much of its new underfunded status.

Presenting its results for the fourth quarter of 2008, TNT said its cover ratio had dropped from 115% at the end of the third quarter to 93%.

"The negative effect [of the drop in interest rates causing a rise of the pension liabilities] explains about 16% points of the 22% points drop in the cover ratio in the fourth quarter,"  said the pension fund in a statement.

The fund generated a negative return of 14.2% over the entire year, with equities and alternative investments in commodities and hedge funds,, in the main, dragging down the average.

The fund lost 5.1% on its investments in the last quarter alone and said its portfolio was worth €3.89bn at the end of the year.

The fund said it had increased its interest rate risk hedge by 75%, in reaction to the negative developments, causing the drop in the cover ratio to slow down.

The fund's corporate sponsor today reported it had seen a 37% fall in fourth-quarter operating profit as the economic downturn has hit demand.

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