ABP delivers 6.2% annual return amid Covid-19 challenges

ABP achieved a positive return of 6.2 per cent in 2020, with its assets under management rising from €466bn to €493bn.

The Dutch pension fund said its investments were hit hard in the first quarter, but recovered in the following quarters, with 7.4 per cent growth in the second quarter and 6.6 per cent growth in the fourth quarter.

However, the year also saw the fund’s coverage ratio drop from 97.8 per cent to 93.2 per cent, having dropped as low as 82 per cent in the first quarter as the pandemic hit financial markets and interest rates fell.

This means that pensions will remain the same in 2021, as the coverage ratio is just above the limit for pension reduction of 90 per cent following an adjustment of this limit from 104 per cent by Dutch Minister of Social Affairs and Employment, Wouter Koolmees.

ABP chief executive, Corien Wortmann-Kool, said: “A pension increase is a long way off and the chance of a reduction will remain realistic in the coming years. Together with other large funds, we are working hard on a new pension contract for 2026, in which interest rates play a less important role, so that we can increase pensions sooner if the economy is going well.

“In addition, the chance of it decreasing if things go wrong. But there can only be a pension reduction if it is necessary from the perspective of the new pension contract and that is currently insufficiently arranged. That is why I call on Minister Koolmees to quickly clarify the rules of the game for the period up to 2026, so that we can prevent unnecessary cuts.”

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