BELGIUM - The KBC pension fund has adopted a liability driven investment (LDI) solution provided by its parent KBC Asset Management.
The E900m fund, which is 85% funded according to IFRS measurements, will maintain its current asset allocation of 40% bonds, 50% equities and 10% real estate.
KBC Pension Fund Trustee, Edwin Meysmans, said the bond part of the portfolio would provide the liability matching with the use of leverage and interest rate and inflation swaps.
He said the solution still allowed the pension fund to target returns from its equity investments.
Meysmans said the fund’s property allocation was also aimed at reducing volatility and included allocations to infrastructure, forestry and buildings with long term government leases.
The LDI solution will be implemented in June of this year, at the same time as KBC Asset Management rolls out the product.
Paul Beller, CFO at KBC Asset Management, said: “We will be targeting mid-sized funds with this product. That is funds with between E100m and e2bn in assets.”
Meysmans admitted that in the past there had been scepticism over LDI from the fund’s trustees. He said: “Once they realised it did not have to be a bond heavy solution, there was a lot more interest. They had to be convinced that they were not giving up on return."
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Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.