Dutch Pension Fund ABP Returns 4.6% in Q3

Stichting Pensioenfonds ABP, a Netherlands pension fund for government and school employees and the country’s largest pension fund, announced Friday that it achieved a 4.6% return in the third quarter of the year. Assets of the fund increased by 23.4 billion euros ($25.41 billion) to 533 billion euros at the end of the quarter.

Pension plan liabilities increased by 24 billion euros to 465 billion euros in the quarter as a result of the fund’s actuarial interest rate declining by 30 basis points to 2.2%. As liabilities outpaced the growth in assets, the fund’s coverage ratio fell to 114.6% in the quarter from 115.6% at the end of Q2. The fund requires coverage ratios to be greater than 110% to increase pension payouts.

“ABP’s financial position is fairly stable. We posted a good return this quarter, which almost compensated for the sharp increase in the value of all the future pension payments,” said Harmen van Wijnen, ABP’s chairman of the board, in a statement. “That is a good thing. After all, our financial position is important to achieving our ambition of a pension with great purchasing power.”

ABP has more than 3 million participants from nearly 3,500 government, education and independent employers, according to the fund’s 2022 annual report.

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Real estate and fixed income were the fund’s highest-performing asset classes during Q3, returning 4.7% and 4.3%, respectively. Equities returned 2.2%, and the overlay portfolio returned 1.8%.

The only asset class in ADP’s portfolio that reported a loss was alternative investments, which returned negative 0.3%. Private equity returned negative 1.3%, while hedge funds returned negative 3.5%. Commodities and infrastructure returned 0.9% and 1.1%, respectively.

As of the end of the third quarter, the fund allocated 38.7% of its assets to fixed income, 29.5% to equites, 19% to alternative investments, 9.8% to real estate and 2.3% to overlay assets.