NETHERLANDS - The recovery of BPF Bouw, the €26bn pension fund for the building industry, has been so successful that it is already able to grant all its participants 1.45% indexation.

At the same time, the scheme has decided to raise contributions for its average salary pension arrangements by two percentage points to 20.9%, latest results stated.

However, the premium increase appears to have been limited thanks to a quicker than expected recovery, as the new contribution level had initially been set at 22.2%, said Franck Erkens, spokesman for BPF Bouw.

Depending on the building sector they operate in, active participants of the industry-wide BPF Bouw scheme will need to pay between 0.3% and 1.2% of the announced contribution rise.

At the end of October, the pension fund’s cover ratio had risen to almost 112%, according to Erckens. A pension fund is only allowed to grant indexation if its funding ratio is over 105%.

That said, BPF Bouw’s indexation payment is only partial compensation for salary inflation, which hit 2.27% in 2009, Erkens noted.

The scheme’s recovery plan is designed to reach its required financial reserves of 118.2% by the year 2020.

The funding ratio of BPF Bouw was 141% at the start of 2008, but fell to an absolute low of 99.4% by the end of March 2009.

The pension fund said its 31.6% equity portfolio returned 31.4% in 2009, whereas its 43% fixed income allocation delivered 11.2%. Alternatives and property also returned 10.6% and 10.5% respectively.

BPF Bouw - managed by BPF Bouwinvest and pensions provider Cordares - has approximately 846,000 participants, of whom over 210,000 are active and over 209,000 are pensioners.

The scheme has 15,000 affiliated employers within the building industry.

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