NETHERLANDS - The Philips pension fund returned -3.5% during the fourth quarter of 2010 due to rising interest rates.
The Dutch electrionics giant's pension assets fell to €13.6bn ($18.4bn) from €14.3bn in Q3, bringing it closer to its Q1 and Q2 levels of €13.7bn and €13.6bn respectively.
The Dutch pension fund's investments are divided into two portfolios - a liability matching portfolio which focuses on controlling interest rate risk through bond investments and a return portfolio that seeks higher return through indexation and investments in equities, real estate, hedge funds and commodities.
The liability matching portfolio returned -6.8% against a benchmark of -6.6% during Q4, largely due to the rise in interest rates, which reduced the value of bonds. Meanwhile, the return portfolio yielded 5.7% - 0.2% higher than the benchmark thanks to investments in hedge funds and high yield corporate bonds.
The fund still managed to beat its legally required coverage ratio of 108% by one percentage point at the end of December 2010.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers