The five largest Dutch pension funds reported above-average returns for 2019, despite low or even negative results for the last quarter.The €466bn civil service scheme ABP posted an annual return of 16.8% – in particular thanks to a 27.4% gain on its equity holdings – and generated 1.5% since September.Private equity, commodities and infrastructure yielded 22.3%, 16.5% and 13.3%, respectively.Hedge funds and property contributed with returns of 7.1% and 18.4%, respectively, while ABP’s combined interest and inflation hedge added 1.7 percentage points. However, it lost 1.4% on its currency cover. Highest returnThe €238bn healthcare pension fund PFZW’s quarterly return was flat. But with an annual return of 18.8%, it reported the best result of the five largest schemes.However, its liabilities rose by no less than 17.7%, mainly due to falling interest rates.Although the pension fund lost 4.2% on government bonds in the last quarter, it achieved a result of 6.3% for the entire year.Equity and listed property generated 23.9% and 20.2%, respectively, in 2019, and yielded 6.7% and 1.2%, respectively, in the fourth quarter.Commodities yielded 26.1% during the entire year, and 12.6% since September.Metal schemesBoth the metal schemes PMT (€84.7bn) and PME (€55bn) posted annual results of 18.1%, despite losing 2.3% and 0.8%, respectively, in the last quarter.PMT lost 8.6% on its liabilities portfolio comprising 46% of its entire assets.Equity, high yield investments and real estate yielded 23.4%, 12.7% and 14% in 2019.Due to rising interest rates and consequent effect on its fixed income holdings, BpfBouw, the €66.2bn scheme for the building sector, saw its assets drop by €360m in the last quarter. PMT and PME reported a similar loss.The building scheme lost 0.4% in the past three months, but returned 17.6% for the full year.With returns of 26.7%, 11.8% and 16%, respectively, equity, property and alternatives were the main contributors.UnderfundedFour of the five largest schemes closed the year with coverage ratios ranging from 95.8% (ABP) to 97.6% (PMT), which would classify the schemes as underfunded under the financial assessment framework (FTK).However, social affairs’ minister Wouter Koolmees has decided to reduce the minimum required funding level from 104.3% to 90% for 2020, pending the review of the pensions agreement.Both Corien Wortmann, chair of ABP, and Peter Borgdorff, director of PFZW, highlighted the importance of designing new pensions arrangements.They said their minimum funding must be raised to the official level of 104.3% in order to avoid rights cuts in 2021.Wortmann added that ABP also expected interest rates to remain low in the coming years, and for returns to be no more than 4% on average.“Crazy”Benne van Popta, PMT’s employer chair, said he expected 2020 to become a “difficult year because of developments on the financial markets as well as new regulation”.Jos Brocken, the scheme’s employee chair, also emphasised the need for quick pensions reform.He said continuous looming rights cuts, as a result of a fluctuating coverage ratio despite high returns, were driving PMT’s participants “crazy”.