NETHERLANDS - The coverage ratio of the average Dutch pension fund has dropped by 9 percentage points to 98% since the end of July, figures from consultant Aon Hewitt have suggested.

The consultancy's findings would suggest funding at many pension funds has fallen below 90%. Moreover, a brief survey among already ailing pension funds has shown that many are facing benefits cuts if coverage ratios fail to improve by year-end.

The €1bn scheme for the meat, cold meat and snacks sector (VLEP) reported a funding ratio of 93.4% at the end of July, adding that its recovery plan had already prescribed a coverage of 96.5% at year-end.

The €1bn occupational pension fund for notaries (SNPF) reported a funding of 94% at the end of July after applying a benefits cut of almost 2% at the start of the year.

The €720m scheme for notaries' staff, which also had to cut pension benefits by more than 2%, posted a funding ratio of 96.4% at the end of July after already anticipating a 6.8% cut.

At the end of the second quarter, the pension funds of construction company Ballast Nedam and corporate advice bureau GITP posted coverage ratios of 96% and 95.6%, respectively.

Earlier, the GITP scheme said it was expecting to cut benefits by 4.1% in 2012.

A spokesman for the €396m pension fund for the cultural sector said the scheme's funding at the end of July was 91%.

However, he underlined his scheme's defensive investment strategy, with 75% of its assets allocated to fixed income and 15% to equity, while having hedged 65% of its interest risk.

The €100m pension fund for the paint and printing ink industry reported a funding of 96.9%  at the end of June, with its recovery plan already anticipating a benefits discount of 5.9% on 1 April 2012.

Elsewhere, the €3.2bn industry-wide scheme PNO Media said its current funding has fallen below 100%, adding that a benefits cut in 2013 is likely if its financial position has not improved at the end of this year.

The company scheme Océ, manufacturer of copier machines, posted a funding ratio of 97.5% at June-end.

The €2.7bn pension fund of industrial conglomerate Stork reported a coverage of 98.4% at the end of last month.

A spokesman for pensions supervisor De Nederlandsche Bank (DNB) declined to provide any details about the number of pension funds that have fallen below the minimum required coverage ratio of 105%.

"Given the current volatility, we don't comment on the daily situation," the spokesman said. "Our reference point is pension funds' position at the end of the year, when they must evaluate their recovery progress."

Aon Hewitt said it has derived its figures from the potential coverage ratio of a fictitious pension fund, based on data from the DNB and investment data provider the WM company.

The figures are based on a strategic investment mix of 30% equity and 50% fixed income, a 50% interest hedge and a 16-year duration.

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