The recovery of the large pension funds is continuing, but most employees and pensioners will not notice it for the time being. There are no more threat of pension cuts, but most large funds have not yet built up enough reserves to be allowed to distribute a substantial inflation correction.
The four largest funds, ABP, Zorg en Welzijn, PMT and PME, had a so-called funding ratio of 102 to 106 percent at the end of last month, according to their quarterly figures presented on Thursday. At 100 percent, according to the calculation rules, a fund has enough capital to guarantee future payments. However, they are only allowed to distribute a modest increase once their average funding ratio over the past twelve months (their ‘policy funding ratio’) has reached 110 percent.
Civil servants and education fund ABP saw its funding ratio improve slightly in the past three months from 104.5 to 105.3 percent. “We understand the call for an increase in the pension,” said chairman Corien Wortmann-Kool in a press release. “But the reality is that the current rules, which apply to all funds, do not allow for that.” Metal fund PMT (102.5 percent) would also like to increase pensions quickly, and says that “unfortunately there is no idea yet”.
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Small funds allowed to raise
Most supplementary pensions have not or hardly been increased for about ten years. The AOW benefit did increase in line with the average collective labor agreement wage development.
At the same time, the large sector funds are doing worse than average. Many small and medium-sized funds are in better shape, according to figures from regulator De Nederlandsche Bank. 84 of the 191 pension funds in total already had a policy funding ratio of at least 110 percent in June, indicating a small pension increase for their affiliated employees and retirees.
The financial health of pension funds has been on the rise since March last year. This is largely due to share prices reaching record highs. In addition, the funds benefit from rising interest rates. The higher the interest rate, the less capital a fund needs to maintain its funding ratio.
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Pension increases are not yet in sight, despite recovery
Source link Pension increases are not yet in sight, despite recovery