The Netherlands’ Mars Pension Fund (MPF) has reported that its funding level improved in 2022 despite a return of -17.5 per cent on its investment portfolio.

Its annual report revealed that the market value of its assets fell from €1.94bn at the end of 2021 to €1.58bn at the end of 2022.

However, its liabilities also fell over the year, from €1.3bn to €0.9bn, which caused its funding level to rise from 138.1 per cent to 150.7 per cent over the same period.

“This has led to the paradoxical situation that our funded position has improved while the value of our assets has dropped by almost 17 per cent,” said MPF board chair, Fred Nieuwland.

“The improvement in funding position has also allowed us at the end of September to grant a target indexation of 3 per cent as per 1 January 2023.”

The pension fund’s investment returns resulted in losses of €337,631 following four years of positive investment returns.

Its annual average return over the past five years was 1.9 per cent in 2022, falling from 6.9 per cent in 2021.

Meanwhile, its annual average return over the past 10 years was 5.6 per cent at the end of last year, falling from 9 per cent the previous year.

In the report, the MPF noted that the war in Ukraine and shifting monetary policy had resulted in “massive” price drops for almost all asset classes, which was the primary driver behind the negative investment return.

However, this was offset by interest rates rising “steeply”, which had resulted in liabilities falling.

Commenting on the switch the to the new pension system, Nieuwland said: “To prepare for the planned transition to a new pension plan design we have installed a WTP Steering group plus relevant workstreams and a project management structure that will perform the necessary work to categorise the relevant information, to define the relevant decision criteria and to provide social partners and the pension board with relevant insights to facilitate the decision-making process that each of these entities will need to execute to achieve a successful transition at the selected transition date.”

Share Story: