Dutch Pension Funds Rebound from December’s Santa Claus Blues
After a rough 2018, Dutch pension funds are finding redemption in the markets.
Civil service plan ABP ($484 billion) and health care retirement fund PFZW ($243.6 billion) felt the sting of a cold, winter gust that knocked assets around. The two plans suffered losses (-2.3% and -0.4%, respectively) in 2018, sinking their funding ratios a bit.
Amid this year’s cold, wintry gusts, first quarter assets showed signs of recovery. ABP returned 8.2% and PFZW gained 8.5% in the period ended March 31. Both public equity and real estate worked in their favor, raking in 14.2% and 10.4% for the former and 11.5% and 12.7% for the latter.
As the European Central bank held off on raising rates, government bond prices rose, and, in turn, the plan’s fixed-income portfolios did, too. ABP’s gained 3.9%, while PFZW’s generated 1.7%.
Corien Wortmann-Kool, ABP’s chairman, is pleased with the plan’s recovery, but she doesn’t like Europe’s low interest rates. “This is not good news because it means we need to keep more money in reserve in order to meet our pension obligations,” she said, adding that the fund could very well cut benefits in 2021.
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