Funding ratios for the five largest pension funds increased in the past quarter, mainly due to higher interest rates. Funds announced Thursday that ABP, PME, PFZW, PMT and bpfBOUW are now looking at whether they can raise their pensions next year.
The financing ratio indicates the minimum amount of money that the pension fund must have in cash in order to be able to meet its obligations now and in the future. ABP, the civil servants’ pension fund, saw coverage rise to 122.7%.
“Most of the participants can no longer follow. Financial markets are doing poorly, the words depression and crisis are mentioned regularly, yet the coverage ratio is rising and ABP’s financial position is improving. This has everything to do with the rise in interest rates. Because this It means we have to maintain less cash to meet our obligations,” says Chairman, Harmen van Wijen.
At the end of this year, ABP will study whether pensions can be increased in 2023. At the beginning of this month, the Civil Servants Fund has already increased pensions by 2.39 percent.
The Metallurgical and Technology Workers’ Pension Fund, PME, is turning to indexing employee pensions now that funding has risen to 112.4 percent. In November, the fund will consider the possibility of increasing pensions again in 2023.
Pensions can go up with a 105 percent funding rate
Pension funds were recently allowed to increase pensions if they had a policy funding ratio, which is the average of the current funding ratios over the past 12 months, which is 105 percent. Until recently, that was 110 percent.
The coverage of Pensioenfonds Zorg en Welzijn (PFZW) increased to 113.0 percent. “We sincerely hope that we will be able to increase pensions again on January 1, 2023. But that is still very uncertain,” says CEO Joanne Kellerman.
Pensioenfonds Metaal en Techniek (PMT) has a funding ratio of 109.3 percent. Thanks to higher interest rates, PMT was able to announce an index of 1.29 percent as of October 1, 2022 at the beginning of this month. According to the fund, “in November, in accordance with the regulations, it will be reviewed whether indexing is possible from January 1, 2023.”
The bpfBOUW board wants to raise pensions for the second time this year. On January 1, pensions were already indexed at 1.76 percent. The intention now is for another increase to 2.57 percent as of July 1. The construction pension fund saw the funding ratio rise to 137 percent in the last quarter.
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