Dutch pension fund ABP achieved a positive investment return of 9.3 per cent in 2023, its annual performance update has revealed.

The positive annual return of €42.6bn was primarily driven by the pension fund’s investment performance in the fourth quarter, when assets rose by €44.3bn (9.7 per cent).

ABP said this was due to sharply falling interest rates, which caused financial markets to rebound.

During the year, ABP’s available assets increased from €459bn to €502bn.

The pension fund’s coverage ratio fell slightly in 2023, from 110.9 per cent to 110.5 per cent.

In the first three quarters of the year, ABP’s coverage ratio rose steadily to 118.6 per cent, driven by “modest” returns and increased interest rates.

In the fourth quarter, the pension fund incorporated its pension increase of 3.03 per cent into the coverage ratio, resulting in the fall to 110.5 per cent.

ABP’s policy funding ratio, which is the average of the previous 12 months’ coverage ratios, fell from 118.6 per cent to 113.9 per cent in 2023.

Commenting on the update, ABP board chair, Harmen van Wijnen, said: “Because interest rates fell sharply in the last quarter, our liabilities increased, but the financial markets also improved, and this ensured a positive return at the end of 2023.

“And thanks to the transition to the new system, we were allowed to third time using more flexible government rules. This allowed us to increase pensions again by more than 3 per cent as of January 2024.

“In the last quarter, after the elections, there was renewed discussion about the Future of Pensions Act (Wtp). That is absolutely undesirable.

“Changes to the Wtp are not necessary. The law was drawn up very carefully and democratically and is better for our participants.”

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