NETHERLANDS - The three large pension funds of Dutch airline KLM reported returns of at least 4.6% during the third quarter, taking their year-to-date results to more than 10%.

Funding levels also climbed considerably over the period, due largely to the prescribed switch from the three-month average of the forward curve to the ‘ultimate forward rate’ as a discount criterion for liabilities.

The coverage ratio for KLM’s €6bn pension fund for ground staff increased from 105.1% to 113.7%, in part on the back of a 4.8% return.

During the third quarter, the fund’s 45.4% fixed income portfolio and 40.7% equity holdings returned 5.9% apiece.

Its 8.1% property allocation returned 2.7%, while equity and currency hedges lost 0.5% and 0.1%, respectively.

The ground staff scheme also indicated that its interest hedge - at least 45% of liabilities - failed to contribute to its quarterly result.

Profits over the period totalled 11.3%

The €6.8bn pension fund for flying staff also returned 4.8% during the third quarter, taking its year-to-date return to 10.2%.

Its coverage ratio rose from 117% to 126.4%, with the new discount rate adding 3.9 percentage points to funding.

KLM’s €1.9bn pension fund for cabin staff reported a quarterly return of 4.6% and a year-to-date result of 12.1%

Its funding improved from 101.9% to 112.8% - the required minimum coverage is 105%.

The KLM schemes have contracted out their asset management and pensions provision to Blue Sky Group.