NETHERLANDS - The assets of Dutch pension funds are back at pre-crisis level after the schemes gained a €32bn profit from rising markets and currency valuations during the first quarter of 2010, according to pensions regulator De Nederlandsche Bank (DNB).

The quarterly return of 4.5% has raised the schemes' combined assets to €772bn, DNB said.

Equity investments generated 6.4%, following a rise of the MSCI World and AEX indices of 4% and 2.6%, respectively.

Further, the US dollar appreciated by 6.9%, increasing the value of US equity, which currently accounts for about 25% of Dutch pension funds' equity holdings, the regulator said.

It added that pension funds' hedges through currency derivatives had led to additional payments of approximately €3bn.

DNB said the drop of interest rates was the main contributor to the 4.1% return on fixed income investments.

Interest rates on recently issued 10-year Dutch government bonds have fallen by 0.2% to 3.3%.

Despite the growth of assets, schemes' liabilities have increased even further, after falls in long-term interest rates - the criterion for pension fund liabilities - as well as increased longevity, DNB noted.

Meanwhile, the watchdog said the planned update of the financial assessment framework FTK needed to address a discrepancy between pension funds' nominal and real approaches, as well as imbalances between risks and returns.

The OECD recently argued that pension contributions needed to be increased and that the retirement age must be raised by at least two years to 67 to counter the financial effects of population ageing in the Netherlands.
 

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