Crisis forces schemes to rebalance

Over the last quarter of the year, Dutch funds sold almost €9bn of equities and €17bn of fixed income assets, including bonds.

The DNB said the sales were largely caused by movements on the stock markets, with rapidly declining equity values forcing funds to sell bonds and other fixed income assets in order to maintain relative weightings in their strategic investment portfolios.

As a result of sales and declines in values, the DNB calculated total holdings in equities and debt fell by €86bn, to €529bn at the end of the year. Compared to holdings at the end of 2007, this represented a year on year fall of 19%.

Financial stocks were by far the largest loser, with about two thirds of all equity sales in the fourth quarter being US companies and financial institutions.

The news follows the DNB's decision to extend to recovery period for underfunded pension schemes from three to five years in light of the extraordinary situation facing the country's retirement sector (Globalpensions.com; 23 February 2009).

Around half of the all Dutch pension schemes have seen the value of assets fall below the minimum 105% coverage ratio, including pension giants such as ABP and PFZW, requiring them to submit recovery plans to the regulator by 1 April.