Pension fund closed the quarter with positive results

“On balance, the return was positive”

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 funded by 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 fourth quarter, the return portfolio's performance was positive. This was mainly due to rising prices in developed equity markets and high yield corporate bonds. The return portfolio also includes investments in equities (emerging markets, small-caps, non-listed real estate and investment grade corporate bonds).

Performance of the overall matching portfolio was negative in the fourth quarter. 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 and repos (short-term loans covered by collateral). An important factor impacting the value development of the matching portfolio is the development of market interest rates. When interest rates decline, bonds rise in value.

Exchange rates play a major role in the foreign investments of the return portfolio. The pension fund hedges a major part of the non-Euro exchange fluctuations.

Overall, total return was +0.4%. Developments in our investments going forward will be published in our next quarterly update.

We assess the return on 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.

Our pension fund largely hedges currency fluctuations. The goal is to reduce the volatility of the results of the overall portfolio and, consequently, the funding ratio. The result of this currency hedging is added to the total return.