Pension fund closed quarter with positive result

''When interest rates decline, the return on our investments rise''

Our investments are based on a long-term horizon. Are you enjoying your retirement already? Are you looking forward to the pension you'll get when you retire and the pension choices you’ll be able to make? Or is your retirement far in the future because you’re a young starter at ING? No matter what phase of life you're in, we fund your current or future pension mainly from return realised on the pension fund’s investments. The remainder is paid from contributions paid into the pension fund (totalling 30.5%). The employer's contribution is 23%. Your part of the contribution is 7.5% That's good to know isn't it?

In the third quarter, performance of the return portfolio was positive. This was due to rising prices in developed equity markets and investment grade corporate bonds. The return portfolio also invests in emerging markets equities, small-cap equities, non-listed real estate and high yield corporate bonds.

Performance of the overall matching portfolio was positive. This portfolio invests in European sovereign bonds, bonds issued by semi-government institutions, covered bonds and residential mortgages in the Netherlands. The portfolio also contains interest rate swaps, the value of which are linked to the development of market interest rates. The positive return was mainly the result of declining interest rates.

On balance, total return was +4.3%. Developments in our investments going forward will be published in our next quarterly update.

We assess the performance of the pension fund's investments by making a comparison with a benchmark derived from the strategic investment policy. A benchmark is a measure which is used to assess the performance of an investment portfolio in the long term. The total return is equivalent to a weighted average of the performance of the matching portfolio and the return portfolio. 

Given that exchange rates play a major role in the foreign investments of the return portfolio, our pension fund largely hedges currency fluctuations. The result of this currency hedging is added to the total return.