NETHERLANDS - BPF Schilders, the Dutch industry-wide pension fund for the painting, finishing and glazing sector has replaced part of its equity investments with allocations in private equity, hedge funds and commodities, in order the achieve more stable returns.

At least 5% of the 41% equities portfolio has now been reallocated to hedge funds, 2% to commodities and 3% to private equity, it said in its annual report.

The €3.4bn scheme, also known as ‘BPF Schilders', has also increased its exposure to high-yield bonds to 5% of its fixed income portfolio, while investments in emerging markets bonds has increased to 10%, and the scheme's exposure to euro inflation-linked bonds has increased to 12.5%.

The underweighting in property has been compensated by commitments of less than 1% in infrastructure,  the scheme added.

Changes follow an ALM study which led to the outsourcing of the back-office asset management of its provider, A&O Services. This is meant to increase flexibility and expertise, the scheme pointed out.

Furthermore,  a new 'mid-office' has been created, as a go-between asset managers and the external administration.

Despite legislation to discourage early retirement through the raising of tax barriers, BPF Schilders arrangements still allow for retirement before the official retirement age of 65, it claimed.

It has achieved this by increasing the pensionable salary and raising the yearly build-up from 1.75% to 2% while lowering the age workers can start saving for a pension from 21 to 18, the scheme explained.

BPF Schilders reported a total return of 6.2% for 2006 with equities generating the best yield of 13.5%. Property and fixed income returned 10.3% and 0.4% respectively and the scheme's coverage ratio rose by 7.4% to 137.3% at the end of 2006.

The painters' pension fund has 42,155 active participants, 73,630 deferred members and 30,840 pensioners.