Investment policy: a quick introduction

Checked on 02 November 2020

Investment policy: a quick introduction

Philips Pensioenfonds intends to offer a retirement income that retains its purchasing power over time. This ensures that your retirement income enables you to buy the same amount of goods and services as you are able to buy now. We call this a real retirement income, which is our ambition. To realise this ambition, we aim to increase your retirement income by increases in prices (for retired and non-contributory policyholders) and wage increases (for active members). This is called ‘indexation’. For the Pension Fund to be able to index your pension in the long term, our investments need to generate a sufficient return.

Strategic allocation

Philips Pensioenfonds invests in fixed-income assets (such as bonds) and return assets (such as equities and real estate). The allocation to these two investment categories matters. The chosen distribution (see the graph below) offers a strong possibility of realising our ambition - a realistic pension - without exposing the Pension Fund to excessive risks. This is based on the scenarios, derived in part from historical data, that the Pension Fund uses to determine whether the ambition is feasible. The strategic allocation is as follows:

  • 60% of the Pension Fund’s assets are invested in fixed-income assets. These largely consist of comparatively ‘safe’ investments, for example government bonds that are diversified across European and non-European securities. Fixed-income assets go a long way to securing part of the projected future pension payments. The Pension Fund also invests in somewhat riskier fixed-income securities, such as high yield bonds and emerging market bonds that have higher expected returns. Lastly, fixed-income assets also include investments in cash.
  • 40% of the Pension Fund’s assets are invested in return assets. Investments in these more ‘high-risk’ assets, including equities and real estate, are intended to achieve a higher return.

 

Return on the portfolio

To find out more about the total return on the investments, click here

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