NETHERLANDS - The €27.6bn pension fund for the Dutch building industry, bpfBouw, returned 0.7% on investments during the second quarter, but saw its coverage ratio fall to 104.5%, less than the required minimum.

The funding of bpfBouw decreased from 108.2% to 102.2% in the second quarter, following the considerable drop in long-term interest rates during the period.

However, a subsequent rates rise led to a coverage ratio of 105.3% at the end of July.

During the first six months of 2010, bpfBouw returned 5.5%, exceeding its benchmark by 0.5 percentage points.

Pension fund officials attributed the positive performance to the scheme's hedge - through swaps - of approximately 50% of the interest risk on its liabilities, which contributed 2.9 percentage points to the result.

In addition, its inflation swaps and currency hedge delivered negative results of -0.1% and -2.7% respectively, officials said.

BpfBouw offers pension services to approximately 825,000 employees and former employees in the building sector.

It has approximately 14,500 affiliated companies.

The scheme's pension administration is carried out by Cordares, while APG and Bouwinvest manage assets.