NETHERLANDS – The €13.2bn pension fund for the printing industry (PGB) returned 4.1% during the third quarter, leading to a year-to-date result of 10.2%.

Thanks to the quarterly performance, as well as to the introduction of the ‘ultimate forward rate’ as new discount rate for liabilities, the scheme saw its coverage ratio rise from 95.6% to 101.3%.

With a cumulative return of 21.4%, PGB’s French inflation-linked bonds were the best performing alternative investment, it said.

Equity generated 14.8% over the period, while fixed income investments generated 6.6%, with government bonds and credits returning 6.9% and 7.1%, respectively.

Property, commodities and green investments/infrastructure delivered positive year-to-date results of 5.3%, 8.2% and 5.1%.

Since last year, PGB has placed approximately 50% of its assets into a matching portfolio, with 32 percentage points invested in ‘high-grade’, euro-denominated government bonds and 18 percentage points in A+ credits.

Its return portfolio consists of 30% equity and 20% alternatives.

With a funding of 101.3%, PGB’s coverage is almost at the required level for its mapped out recovery.

However, Ruud Degenhardt, the pension fund’s chairman, warned that the latest longevity predictions had yet to be factored into the coverage ratio.

He estimated that these would increase liabilities by 0.9%.

The Pensioenfonds voor de Grafische Bedrijven said it increased contributions from 17.5% to 19.5% of the pensionable salary to compensate for low long-term interest rates, low funding and increasing life expectancy.

It added that it managed to avoid increasing premiums to a cost-covering level of more than 20% due to the upward effect of the new discount rate on the coverage ratio.

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