Pension funds perform poorly by low interest rates – Parool.nl

17-04-15 00:24 pm – Source: Reuters

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The financial position of the large pension funds has deteriorated in the first quarter. Low interest rates ensures that the pension funds of the rise. That is insufficiently compensated by the strong investment results achieved in recent months.

The five major pension funds announced today their coverage. That number indicates how the funds can meet their obligations. The indicator is calculated since early this year in a different way, namely by taking the average over the past 12 months. It is one of the measures of the government to make the pension system more stable.

Four chairing the five funds with their so-called policy coverage under the limit of around 105 percent that is considered safe for long time to pay the pensions.

Further reduction
This way officials ABP at 102.6 percent. That is 2.1 percentage points lower compared to the position late last year. The coverage of pension Care & amp; Welfare (PFZW) fell from 108 percent to 104 percent. That of the metal funds PME and PMT decreased to 102.3 percent and 102.6 percent respectively. Positive exception is bpfBouw Fund with a coverage ratio of 114.4 percent, down 0.6 percentage points.

The Pension Federation expects the coverage ratios will fall further in the coming period. That under the umbrella means that the pensions of many participants will not increase in line with inflation for years (indexing).

No increase
ABP President Corien Wortmann-Kool said earlier this week that the pensions of 2.8 million ABP participants will not be raised in 2016 . Also PFZW (two million people) now says by persistently low interest rates “our ambition to index not be able to achieve the retirement of our participants.”

The historically low interest rates is the result of action by the European Central Bank (ECB) to boost the weak economic growth in the eurozone and stimulate inflation. PFZW director Peter Borgdorff: “We are deeply concerned about the impact it may have forced low interest rates in the longer term. The economy is now perhaps supercharged, but this happens artificially causing the lack much needed structural reforms “

(Produced by the editors).