ABP: Signs of hope after a bleak 2008

Main points:

• 2008 negative return and falling interest rates; coverage ratio dropped significantly
• return of 1% in first four months of 2009
• coverage ratio rises slightly in first four months of 2009

Amsterdam, 11 May 2009. The year 2008 was a challenging year for the ABP pension fund. Because of the deterioration in the financial position as a result of the credit crunch, the Board had to make the difficult decision not to adjust the pensions in line with wage trends in 2009. ABP recorded a negative return of 20%, the long-term average return (from 1993) is therefore 5.9% per year. At the end of 2008, the invested assets amounted to 173 billion euros. Interest rates also fell sharply, resulting in an increase in liabilities. Those developments resulted in a coverage ratio of 90% at the end of 2008, which meant that the fund found itself in a situation of under funding. In the months of March and April of 2009, the coverage ratio was showing a slight upward trend again for the first time. A slight increase in interest rates and the investment results contributed to that. Encouraging developments, but the ABP Board warns that “one swallow does not make a summer”. The financial markets are still fluctuating, which is a sign of underlying uncertainty. The fund will continue to work on the recovery of the fund’s financial position, and will do so by means of the recovery plan, which ABP presented to the supervisory authority at the end of March. The overall picture after the first four months of 2009 is in line with the ABP recovery plan.

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