NETHERLANDS - The strong rebound in the global stock markets has helped two of the Netherland's biggest pension funds to post "significantly positive" results for 2003, after two years of negative results.
ABP, the pension fund for civil servants, and PGGM, which handles pensions for health and social workers, returned 11% and 15% respectively for 2003. For the fourth quarter, ABP posted returns of 4.1% while PGGM was at 5.9%.
Both funds were able to meet the coverage levels of 105% which the regulator Pensioen & Verzekeringskamer stipulated to be the minimum level required, with ABP at 109%. and PGGM at 105%.
ABP’s equities portfolio returned 18.8% while returns from fixed interest were at 2.3% and alternatives at 16.1% for 2003.
Jean Frijns, (pictured) investment director, ABP said: “We have had very positive results from our equities, real estate and commodities portfolio. However, the returns from the fixed income portfolio were disappointing. Another major factor in 2003 was the strong decline of the dollar. Fortunately, we had hedged upto three-fourths of our portfolio. If we had hedged the entire portfolio, however, we would have had returns of 13% instead of 11%.”
Roderick Munsters, managing director investments at PGGM said: “Following two years of negative returns, the financial year 2003 was an excellent year for PGGM’s investments, in particular the second and fourth quarter.
“In 2003 we were successful in maintaining our long-term investment policy of a well-diversified portfolio focussed on real assets (equities, real estate, commodities are approximately 70% of total investments). All our investment categories achieved positive returns in the fourth quarter, with returns from equities at 10.4% and commodities at 12.0% being particularly satisfying.”
Despite the negative returns on European and US government bonds, PGGM has, through investments in for example high-yield bonds, emerging markets, inflation-linked bonds and Japanese government bonds, generated a positive return of 0.2% on its fixed-income portfolio, the fund said.
The fund’s five-year return, measured over a period of twenty quarters, was 4.9%, lower than at the end of the previous quarter. This has been attributed to the fourth quarter return of 12.2% in 1998 being replaced by the 5.9% return in the most recent quarter in the calculations.
Munsters said: “Since 2000, PGGM has hedged almost all currency risks in its investment portfolios. In 2003 this policy implied that PGGM was able to fully benefit from the high returns in local currency of its investments in various international markets. The US S&P 500 equities index achieved a return in 2003 of close to 29% in US dollars, but only 7% in euros. PGGM’s hedging result in 2003 totalled e2.8 billion, which represents a return of approximately 6.2%.”
The Pensions Regulator (TPR) and Financial Conduct Authority (FCA) have outlined plans to better understand the consumer pensions journey as they launch their joint strategy.
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.