NETHERLANDS – Dutch industry-wide pension funds made average returns of 14.3% in 2005, the Dutch Association of Industry-wide Pension Funds, or VB, reported.
“The high returns – due to excellent results of equity, commodities and real estate - compensate largely for the poor returns at the beginning of this century”, it said.
The boost in returns has led to an increase of the average coverage ratio of the industry-wide schemes to 128%, based on a fixed accounting rate of 4%.
But the funding ratio would have been slightly lower if it had been calculated according to the market rate. This will be required by the new financial assessment framework, or FTK, which is expected to come into force in 2007, as part of the new pension legislation.
“Because of the fluctuating market rate, the new accounting method will cause large swings of the coverage ratios. The average percentage at the end of 2005 and at the end of the first quarter would have been 121% and 130% respectively,” the VB explained.
The young €58m ICT scheme ICK tops the list, with a coverage ratio of 349% under the FTK measure. Amongst the schemes with the highest funding ratio, are the pension funds for pharmacy staff and railways fund SPF, with 177% and 172% respectively.
According to the VB, at the end of last year, only four pension funds had a funding ratio of less than 105%, as required by the FTK. “They are out of danger now, because of the rise of the interest rates in the meantime.”
Top performers among the industry-wide pension funds were the large metal schemes PME and PMT, with returns of 19.4% and 18.5% respectively. The scheme of the sugar and chocolate processing industry yielded 16.8%.
The portfolios of the association’s 87 member schemes consists on average of 42% of fixed income, 12% real estate and 46% of equity, private equity and commodities. During 2005 their stake in fixed income decreased by one percentage point. The investments in equity rose by one percent.
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