The financial position of Dutch pension funds PGB, PNO Media and PND has worsened significantly over the third quarter, due to the combined effect of falling interest rates and anaemic equity markets.

As a consequence, funding fell sharply, having a knock-on effect on official policy funding – the average coverage over the 12 months previous and the criterion for indexation and rights cuts.

The €4.9bn PNO Media said its policy funding fell by 2.1 percentage points to 98.4% following a quarterly drop in its actual funding of 8.6 percentage points to 94.2%.

The pension fund attributed the narrowing coverage ratio to interest rates, which fell by 26 basis points to 1.7%.

A 2.7% loss on investments over the quarter translated to a 3-percentage-point drop in the coverage ratio.

The scheme reported quarterly losses of 9.7% on equity and 11.4% on local currency-denominated emerging market debt.

Government bonds returned 4.3% year to date.

Infrastructure returned 4.5% over the third quarter and 8.5% year to date, while private equity returned 6.8% and 21.9% over the same periods.

Overall, PNO Media returned 0.5% year to date.

In other news, PGB, the €20.1bn pension fund for the printing industry, lost 2.1% on its investment portfolio, bringing its overall return for the year to date to -0.4%.

It attributed the performance chiefly to a 10% loss on equity, but it also reported a 2.8% quarterly loss on infrastructure.

Infrastructure, which returned 7.7%, and private equity, which returned 15.2%, were PGB’s best-performing asset classes over the first three quarters.

Government bonds, meanwhile, returned 4.6% over the third quarter.

According to PGB, falling interest rates over Q3 increased its liabilities by €1.2bn to €20.5bn.

Its policy coverage fell by 1.5 percentage points to 102.5% in the wake of a drop in actual funding, which decreased by 7.5 percentage points to 97.6%. 

Lastly, PDN, the €6.5bn pension fund of chemical company DSM, said it lost 2.8% in the third quarter, having reported a 7.4% loss for the quarter previous.

It said a €253m increase in liabilities, culminating in a 8.2% drop in actual funding, had exacerbated a €221m quarterly loss.

PDN closed the last quarter with a policy coverage of 107.5%.

A number of Dutch pension funds have produced disappointing results over the third quarter, including the five largest schemes in the Netherlands, the KLM schemes and Vervoer.

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