NETHERLANDS - ABP, the Netherlands' largest pension fund, will have to submit a proposal to the pensions regulator explaining how it will improve its solvency ratio as latest figures from the €195bn pension fund shows its cover ratio has dropped below 125%.
Stichting Pensioenfonds ABP today revealed the fund saw seen its assets fall by 9.8% in value in the nine months to the end of September, which in turn has lowered its assets to €195bn and its cover ratio has dropped 22 percentage points from 140% to 118% - meaning ABP must now specify to De Nederlandsche Bank (DNB) how its recovery plan will improve funding levels over a 15-year period.
ABP notes the pension fund still has "several tens of billions of euros" to cover its €166bn in pension liabilities, but market conditions means it has been forced to delay its decision on pensions indexation until December, a spokesman today confirmed to IPE.
Elco Brinkman, chairman of the board of trustees at ABP, said in a statement there is no reason why anyone should be "overly concerned".
"It is rough weather for the financial markets all over the world. And naturally ABP too is feeling the effects of that. ABP, however, pursues an investment strategy that is focused on the long-term. The risks are spread, both in the nature of investments and geographically. It is unfortunate that we have now fallen below the required coverage ratio, but there is no reason to be overly concerned," added Brinkman.
Equities were the biggest culprit behind the pension fund's losses and had fallen by 24.1% by the end of September, while real estate also generated a negative return of -7.2% and its 41.6% holding in fixed income investments delivered a loss on investment of 0.5%.
In contrast, other asset classes rose as infrastructure returned 1.5%, private equity delivered a gain of 2.1%, commodities rose 2.5% and ‘other investments - hedge funds and innovative investments making up 4.9% of holdings - rose 0.4%.
ABP has altered its asset allocation slightly since the beginning of the year and increased its fixed income and ‘other investments' holdings by 1.2% and 0.5% to 41.6% and 5.3% respectively.
ABP is the industry-wide pension fund to over 2.7 million members.
If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com
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