Friday, January 30, 2015 - 13:43
Biggest Dutch pensions underfunded in 2014
Four of the five largest industry pension funds had a funding shortfall on December 31st, 2014, the pension funds announced today. That means that their coverage is less than the required minimum of 104.2 percent. Umbrella organization Pension Federation expects that this is probably also true for many other funds that have not published their figures yet. The coverage ratio indicates the extent to which funds can meet their future obligations. Over the past three months ABP saw their coverage decrease by 0.2 percentage points to 101.1 percent. The pension fund for government and educational institutions, which has 2.8 million members, thus has a coverage of 3.1 percentage points below the legal minimum. "The wealth of ABP increased by more than 9 billion euro this quarter", said vice president Cees de Veer. "The coverage nevertheless dropped because the interest rate, with which the obligations are calculated, has decreased again." The low interest rate means that many pension funds have insufficient resources available to meet their long term liabilities, despite increased returns. The coverage ratio of the Pension Fund of the Metalelektro (PME), which has 630 thousand members, decreased in the 4th quarter from 102.6 percent to 102 percent. Franswillem Briet, the chairman of PME, believes that the European Central Bank's policy increased the pension funds' problems. "In particular the deliberately low kept interest is an impediment to the recovery of the financial position of pension funds", he says. The coverage ration for the Pension Fund Care and Welfare, which has over 2 million members, decreased from 105 percent to 102 percent in the 4th quarter. The coverage ratio for PMT stood at 103 percent on December 31st, 0.2 percent higher than in the 3rd quarter. The coverage ratio of the pension fund for the Construction Industry (Bpfbouw), which has more than 806 thousand members, amounts to 114.5 percent, 0.7 percentage points higher than in the 3rd quarter. Bpfbouw is thus the only one of the five largest pension funds that has a coverage above the required minimum.