NETHERLANDS - Dutch industry wide pension schemes are further improving their total financial position, according to the funds' umbrella organisation, the Vereniging voor Bedrijfstakpensioenfondsen (VB).
Presenting the annual results of its members' performance last year, the VB argues that since the end of 2006 none of the funds are underfunded, meaning that none of the schemes had a covering ratio below 105%.
Last year saw coverage ratios on average go up to 136%, this in comparison to 122% in the year before.
The typical, unweighted, investment return in 2006 was around 6.2%, with equity, real estate and private equity performing particularly well.
"In most cases commodities, part of the alternative investments portfolio, showed a negative return. Fixed income booked just a small positive return," added the VB.
The standard portfolio now has around 40% in fixed income, around 42% in equity, 13% in real estate and almost 6% in alternatives.
The VB said that all industry-wide funds accomplished the so-called performance test 2006, which is the average z-score over the period 2002-2006.
The z-score measures the implementation quality of the investments by a measure which indicates how a fund performed in comparison to a previously set benchmark.
"The Netherlands is the only country in the world which tests the relative performance of pension funds in such a way," argued the VB.
Also the pension premiums are stable, and funds' indexation has improved since last year: "On average the premium of pension funds now is around 15% of the salary. Employees pay around 60%, employers around 40%."
Though pension funds will still not fully index the built up rights and pension payments in 2007, the VB spots an improvement in relation to previous years, when declining stock markets and interest rates prevented many schemes from indexing fully.
"For pensioners 92% will be realised, this in comparison to the 72% in 2006. For employees in active services the indexation goes up from 72% of the maximum indexation in 2006 to 88% of the maximum indexation in 2007," the organisation announced.