The Dutch pension fund for disabled workers, PWRI, is still considering merging with another scheme despite the failure of its talks with healthcare scheme PFZW last year.In its 2016 annual report, the €8bn fund said it still believed a merger would be a good solution for its long-term future – although continuing independently would also be a possibility.Last October, negotiations with PFZW ended without result. According to PWRI, joining the €186bn healthcare scheme would have offered its participants insufficient benefits.However, a month later PWRI was boosted by the introduction of a €10bn annual payment from the Dutch government, introduced as compensation for the effect of the Participation Act. This legislation prescribed the regular business community to start employing disabled workers. Since then, PWRI has continued as a closed scheme.The board indicated that the PFZW merger negotiations had spurred it on to improving its pension arrangements.The pension fund posted an overall return on investments of 7.7%, with its matching portfolio (63% of the overall portfolio) generating 6.1%.Its liability-driven holdings, including interest rate swaps, returned 25% as a consequence of falling interest rates.The scheme’s return portfolio (37%) yielded 8.6%, primarily due to equity and high yield returns of 10% and 10.2%, respectively.Equity emerging markets and local currency-denominated emerging market debt performed best, generating 14.9% and 12%, respectively.Unlisted property – Dutch housing and retail assets in particular – delivered 7.1%.PWRI said it kept its interest rate hedge, based on the ultimate forward rate, at 25% last year. Its strategy allows for an increase in the hedge when interest rates rise.The scheme’s administration costs per participant grew by €9 to €90. It cited additional costs following new legislation as well as surveys linked to the merger negotiations, and also mentioned the introduction of VAT on administration and the effect of its decreasing number of participants.The pension fund spent 32 basis points on asset management and 5bps on transaction charges.At year-end, PWRI had 208,350 participants in total, of whom 90,270 were employees and 48,610 were pensioners.Its coverage ratio improved from 98.1% to 102.6% during the first six months of 2017, largely as a result of rising interest rates.