NETHERLANDS - Dutch pension funds lost an average of 17% on investments in 2008, according to pensions regulator De Nederlandsche Bank.

Fixed income was the best performing asset class for the 656 schemes and delivered an average return of 3%, the watchdog said in its annual report.

The overall negative return on equity investments was 41.5% while property and alternatives did not fare much better, as the asset classes yielded -15.6% and -9.4% respectively.

Pension funds investing to their own risk requirements had combined assets of €575bn by the end of 2008, said the DNB, and fixed income was the largest asset class as it accounted for 52.8% of the combined asset mix.

Investments in equity, property and alternatives accounted for 31.5%, 11.2% and 4.6% of schemes’ assets respectively, the regulator also stated.

DNB’s yearly statistical survey also revealed 282 of the 656 Dutch pension funds had a funding shortfall and a cover ratio of less than 105% at the end of 2008.

The underfunded schemes represented a total of almost 4.9m participants, whereas only 24 pension funds - with 82,000 participants in total - had a safe cover ratio of over 130%, statistics revealed.

The watchdog suggested workers will see their pension claims and benefits rise by an average of only 0.2% in 2009, rather than the pension funds’ target of 3.7%.

Most workers and pensioners will not receive any compensation at all for price and salary rises, DNB said, adding pension contributions will rise on average from 15.1% to 16% of salary.

The regulator suggested this rise in premiums will be financed largely by employers with an individual company pension fund.

According to the supervisor’s statistics, pension funds’ liabilities totalled €697bn at the end of 2008, which is a drop of €66bn compared to the previous year.

Industry-wide schemes lost a total of €45bn, whereas company pension funds and occupational schemes saw a decrease of €17.5bn and €3.5bn respectively.

Of the 566 pension funds surveyed at the end of 2007, 464 had contracted-out their administration and 498 schemes had also placed their asset management with a third party, said the DNB.

And by the end of 2008, almost 50% of pension funds had set up their internal supervision, and a large majority had opted for a visitation committee which is tasked with checking the scheme at least once every three years, continued the DNB.

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