The five largest Dutch pension funds were in a much better position at the end of the first quarter than they were a year ago. This is evidenced by the pension fund numbers on Thursday. The funding ratio is again higher than 100 per cent in three of the five largest funds.
To determine the funds’ financial position, the financing ratio is considered. This is the ratio between the money the fund will have to pay for future pensions and the amount of money currently in its treasury. On this basis, it will be decided at the end of this year whether the retirement benefits should be reduced.
In recent years, there have been mainly concerns about pension cuts (pension cuts), as funding ratios for most major funds have been around and even below the critical threshold of 90 percent.
This fear has slowly evaporated. ABP, the largest pension fund in the Netherlands, had a coverage ratio of 100.5 percent at the end of the first quarter. PFZW saw its coverage ratio increase by about 15 percentage points to 97.5 percent compared to the first three months of last year.
In the metals sector, PME and PMT funds saw their pension pot fill better: Funding ratios rose to 101.7 and 98.8%, respectively. BpfBOUW coverage increased to 117.3 percent
Pension funds financing percentages by the end of March
ABP: The economic outlook remains uncertain
All pension funds cite the same primary reason for increasing funding ratios: higher interest rates. Since the benefit is higher, funds need to hold less cash to meet all future pension obligations. Pension managers also took advantage of rising stock markets, adding to their returns.
However, the positive developments are no cause for celebration. “It’s good news in and of itself, but the economic outlook remains uncertain,” said ABB chairman Corian Wortman Cole. “That is why, unfortunately, not much will change in the prospects of our participants,” the chairman said. “The increase in pensions remains out of sight and the opportunity to reduce pensions in the coming years remains realistic.”