NETHERLANDS - Stichting Pensioenfonds ABP has posted a record €220bn (US$278bn) in assets, but low interest rates are keeping the pension fund manager from hitting its target solvency level of 105%, ABP said.
"It's an unusual situation - ABP has more assets than ever before, yet despite this, the coverage ratio isn't increasing at the same rate. This is primarily because interest rates are at their lowest in years, and also because of the uncertain financial climate in general. The board of ABP is concerned about this," said vice chairman Xander den Uyl in a release about ABP's 2009 earnings.
ABP posted returns of 20% in 2009 which helped bring its solvency level up to 109%, but longer life expectancy reduced the coverage ratio to 104%. Dutch law requires pension funds to be 105% funded.
Its 2009 investment returns translated to a gain of €35.2bn in assets.
In 2009, ABP made some changes to its investment policy to enhance its risk controls. ABP began better evaluating extreme scenarios, strengthened its risk management and "fine tuned" liquidity and counterparty risk management, ABP said.
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