The financial situation of pension funds has improved since last month’s shares performed well and interest rates rose slightly. In February, the current funding ratio rose by 3% to 106%.
This is evident from monthly pension Thermometer consulting firm Aon Hewitt. With an average of 106% is the current funding level is just above the limit of underfunding.
Since January 2015, however, pension funds base their decisions not on current coverage, but instead on the policy coverage. That is the average coverage over the past twelve months. This remained unchanged in February at 109%, which is 1% point below the limit to indexing.
“If the current funding does not improve, the policy coverage decreases in the course of the year,” says Frank Driessen Aon Hewitt.
Share prices
The shares performed well last month, after the European Central Bank (ECB) announced in January to more than € 1,100 billion to buy bonds to stimulate the economy. Although the buy-back program has not yet started, stock prices are already ahead on this. As European stocks rose as Aon Hewitt example by 7%. In total, the equity portfolio rose by 6% in value.
After the sharp drop in interest rates in January, in February the rate increased slightly. This meant that the bond portfolio in February very slightly decreased in value. Thus, the total yield of the investment portfolio amounted to 2%.
The market rate has increased the value of the pension by 0.5 dropped%. This also has an increasing impact on the coverage.
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