16/7/2009
By Sophie Baker
Stichting Pensioenfonds ABP (ABP) has seen an increase in its coverage ratio, the most important indicator for the Fund's financial position, from 90 per cent to 98 per cent over the first six months of 2009.
Despite the good news, ABP's board has warned against complacency, since the financial markets remain unsettled.
The increase in the coverage ratio has been attributed to an increase in the fund's assets, due to positive returns on investments (of 4.5 per cent over the first six months of 2009), and a decline in liabilities - resulting primarily from an increase in the market rate of interest.
However, the coverage ration did fluctuate before settling at 98 per cent. In February, it fell to 83 per cent, but hit a high in May.
ABP's recovery plan has been approved by De Nederlandsche Bank (DNB), which states the fund's path to restoring its coverage ration to above the required minimum level of 105 per cent within five years. It aims to have a coverage ratio of 93 per cent at the end of 2009.
Looking forward, ABP said one of the key questions for the financial markets is how the national governments and central banks will provide for sustainable growth, and whether the economy can continue to recover once the incentives policy is scaled back.
ABP is the industry-wide pension fund for employers and employees in government and educational institutions in the Netherlands, has 2.7 million clients, and has invested assets of €180bn as at 30 June 2009. ABP is one of the three largest pension funds in the world.
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