Large funds unable to increase pensions this year

The largest pension funds in the Netherlands would like to increase pensions but are not yet able to. Their financial positions at the end of last year were still too meager for that. The funds shared this painful message in their quarterly reports.

"At a time when groceries are becoming increasingly expensive, and energy prices are rising rapidly, that is a hard observation," said Joanne Kellermann, chairman of the board of care fund PFZW. The policy funding ratio, the indicator on which funds decide whether pensions can be increased, remained at 99.7 percent at PFZW. That means that the fund has slightly less than one euro in cash for every euro in future pension obligations. According to the rules, that is too little. "We, therefore, hope for further rapid recovery, which will bring partial indexation of pensions back into the picture."

Civil servants fund ABP scored slightly better at 102.8 percent but came to the same conclusion. ABP hopes that the rules will be relaxed somewhat soon. If the tide is going well financially, an increase in pensions might quickly come into view. "From 1 July this year, the minimum policy funding ratio at which we are allowed to increase will most like fall from 110 percent to 105 percent," explained chairman Harmen van Wijnen of the executive board. "As soon as we are allowed to increase pensions, we intend to do so. We are investigating from what date we can implement this if the policy funding ratio exceeds 105 percent in the course of this year."

Metal fund PME said it understands pensioners' disappointment well. The policy funding ratio there is currently 103.2 percent. The other major metal fund, PMT, is slightly below this at almost 100.8 percent. "We don't want to be too optimistic about indexation soon, but with unchanged interest rates and returns, the start of indexation will soon be in sight again, and our members are in dire need of that," Jos Brocken, PMT employee chairman, said to NOS. 

All major funds notice that their financial situation is getting better. They did good business with investments last quarter. The funds also benefited from rising interest rates on the financial markets. "For many, 2021 was a difficult year due to the coronavirus pandemic. But it was a good year for ABP's financial position," Van Wijnen said to NOS. Concerns of possible pension cuts, which had previously been feared, have therefore ebbed away. 

Of the larger funds, only bpfBOUW has been in good shape for a longer period. Its policy funding ratio has now risen to over 119.3 percent. bpfBOUW also increased pensions somewhat this year. However, it was only a partial indexation, resulting in pensions increasing less than the sharply accelerating inflation.