Dutch civil servants pension fund books 16% return on real estate portfolio

Dutch pension fund ABP generated €3.9 bn, or a return of 16.2% on its real estate portfolio in 2012.

This is significantly higher than the €300 mln booked in 2011, which translated into a return of 1.2% in percentage terms of the total portfolio.

Overall, the civil servants pension fund generated €30 bn from its total portfolio in 2012, or 12.2%, compared to €1.7 bn, or 0.7%, the previous year, excluding the effects of currency and interest rate hedging.

The strong performance of the real estate portfolio was not enough to restore the funding ratio to a sufficiently high level to avoid pension reductions. At end-2012, the funding ratio - the proportion of assets and liabilities - amounted to 96%. As a result, ABP has been forced to reduce pensions by 0.5% from April this year. It will only be able to avoid a new discount if it succeeds in achieving a funding ratio of 104.3% by late 2013.

APB's investment portfolio is managed by its administration arm APG.