For the first time in a long time, all five major pension funds have enough cash in hand to meet their future pension obligations. At ABP, Zorg en Welzijn, the metal funds and the pension fund for the construction industry, this so-called funding ratio was above 100 percent on 30 June. Fulfillment of the fervent desire of retirees and unions to increase pensions is only a long way off.
Only for the construction pension fund does it apply that if the funding ratio remains at the current level, partial indexation is within reach. For this, the coverage ratio over twelve months must be an average of 110 percent and for full compensation even 125 percent. Pensions at bpfBOUW have also increased somewhat in recent years.
The fact that the funds are in better shape than in recent years is primarily due to the somewhat higher interest rates on the capital markets. The stock markets are also doing well this year. “For the first time in ages I can therefore indicate that the chance of a pension reduction next year is very small, but a pension increase is really not in sight yet,” says chairman Corien Wortmann-Kool of ABP civil servants fund, the largest pension fund in the Netherlands.
Beautiful symbolic milestone
Other funds are also cautiously positive. “We are not yet in safe waters, but it is a beautiful symbolic milestone,” says Joanne Kellermann, chairman of Zorg en Welzijn. “It’s nice that the funding ratio is just above 100%, but it’s certainly not time to celebrate yet,” says Terry Troost, employer chairman at metal fund PMT.
At the end of this year, just like last year and the year before, the funding ratios must be at least 90 percent in order to avoid pension cuts in 2022. The government has also determined that in the run-up to the new pension system, the funds must grow to a situation in which their funding ratio is at least 95 percent. This new pension system should come into effect in 2027, which should lead to the funds being less dependent on interest.
The cash of large pension funds is full again, but an increase is still a long way off
Source link The cash of large pension funds is full again, but an increase is still a long way off