NETHERLANDS - Dutch industry-wide pension funds lost an average of 9.3% on their investments in 2008, but this is still considerably better than the performance of pension plans elsewhere, according to a study conducted by CEM Benchmarking.

Pensions schemes from other countries across Europe as well as in the United States, and included in the benchmarking study, returned an average of -19.1% and -24.5% respectively on investments last year, according to the CEM study commissioned by the Dutch Association of Industry-wide Pension Funds (VB), against a global benchmark return of -20.4%.

CEM attributed this difference in performance to a larger proportion of Dutch industry-wide scheme assets being invested in fixed income at the expense of the equity allocation - 52% of holdings in Dutch schemes compared with an average holding globally of 29%.

Pensions funds elsewhere in Europe and the US had respectively invested 46% and 32% of their assets in fixed income, while their equity investments were 42% and 54% respectively, according to the Canada-based firm.

CEM assessed the results of 355 pension plans in total, of which 41 were Dutch schemes, 16 were based elsewhere in Europe and 208 were US schemes. Together they managed €3.33trn in assets in 2008.

The survey suggested that an average benchmark return of -7.7% among Dutch pension funds was also substantially better than schemes elsewhere in the world.

In contrast, however, Dutch schemes showed a larger underperformance, according to CEM - a result which is attributed to the relative large proportion of externally-managed assets in the Netherlands.

Whereas the average underperformance of American and European pension plans was -1.5% and -1.4%, Dutch schemes on average fell 2% short of their benchmark, the survey revealed.

CEM found that VB schemes incurred an average charge of 34bp on their assets - slightly higher than the European average, but lower than the average costs on US pension plans.

"If costs are compared to outperformance, most VB pension funds are in the low-cost category," the benchmarking firm claimed.

The cost of asset management for Dutch industry-wide pension funds, at a charge of 0.3%, is approximately half that of US pension funds, the CEM survey suggested.

That said, the €89 cost per participants among industry-wide schemes was slightly higher than the global average of €76, according to CEM, albeit the firm attributed this difference to a high service level of Dutch pension funds as well as the large number of affiliated employers.

Topics