Pension funds lose billions by turmoil on stock exchange – De Gelderlander

The large Dutch pension funds have lost billions of euros in the second quarter with their investments because it was very turbulent on the stock exchanges. A combination of significant adjustments in the bond markets, uncertainty over interest rate policy and fears of a ‘Grexit’ portfolios of funds hit hard.

largest Dutch pension fund ABP was negative investment return of 4.3 percent. The officials fund lost more than 16 billion euros. With Care Fund PFZW plunged the yield by 6.6 percent in the red. This invested capital decreased by EUR 11.5 billion. Metal Funds PMT and PME saw their investment portfolios with respectively 8.3 and 7.2 percent in value bags, with bpfBouw decreased output by 9.9 percent.

“The rate rises again a bit and we are happy, because rising interest rates mean lower commitments, “said PFZW director Peter Borgdorff Friday in a statement. “The downside of rising interest rates is a loss on our investment in bonds and interest cover.

Recovery
The five funds, which together manage the pension funds for more 7 million Dutch, there were already financially not so good for. Therefore, they had to start this month to submit a recovery plan to DNB. Last quarter, the fund saw their so-called policy coverage deteriorate further. That gauge indicates how much money a fund to meet all future pension obligations.

ABP policy coverage declined slightly to 101.3 percent. In PFZW he went a little harder slicing to 102 percent. PMT saw its coverage to fall to 101.7 percent, 101.1 percent to PME. In bpfBouw the coverage also fell, but this is by 114.1 percent more on a higher level.

The numbers actually give a rosy picture. De Nederlandsche Bank (DNB) conducted earlier this week by a change in the method by which the funds must calculate their coverage. It does not work yet in these quarterly figures, but the adjustment pull the cover ratio of the funds coming period on an annual average by about 3 percentage points down. The funds will therefore have to increase their buffers further, making indexation (increase) in pensions further touches from image and premiums may be increased.