Why pension funds in a bad position – Elsevier

                 Pension funds were announced on Friday their coverage and it shows that their financial situation has deteriorated in the first quarter. The major culprit? Low interest rates.
             

Because of this low interest rate rise the pension liabilities of the funds considerably, pension funds report itself.

Buffer

The funding of pension funds indicates to what extent they can meet their obligations. If a pension fund has a coverage ratio of 100 percent, it can basically meet all requirements, but the funds must have a buffer.

It is a legal requirement for pension funds to have a coverage ratio of 105 percent. Friday shows that four of the five major funds of our country are below that limit. This in the long term it is uncertain whether these pension funds to pay all pensions.

Pension premiums would go down this year, but that party for many workers not. That’s hard to explain to employees who pay compulsory contributions to the fund in which they are connected. Read now & gt;

In this table you can see that four of the five major pension funds do not perform well. Stranger in our midst is building fund bpfBouw that with a decrease of 0.6 percentage points is still leading to a coverage ratio of 114.4 percent.

       
     

       

       

     

       

       

     

       

       

     

       

       

     

       

       

     

	At the end of 2014	First quarter 2015
ABP	104.7	102.6
Care & amp; Welfare	108	104
PME	104.1	102.3
PMT	104	102.6
Build	115	114.4

umbrella organization the Pension Federation expects the coverage rates will decline further. The decline now does not lead to a reduction in pensions, but for many retirees is an indexation, linking pensions to wage and price development, long time no longer.

“Their pensions are thus slowly eroded, “the Pension Federation writes in a press release.

Officials

So let civil servants pension fund ABP earlier this week that the pensions of 2 8 million participants next year not be increased. It is also the chance that the pensions the first coming years grow with wages “very, very limited.”

ABP has in recent years also can not do so, the pensions now to 10 percent behind the wages.

The low rate is due to the stimulation of the European Central Bank (ECB). Interest rates are at a historic low point, to boost and stimulate inflation, weak economic growth in the euro zone.

PFZW director Peter Borgdorff says he’s “very concerned” about the consequences makes which may have forced low interest rates in the long term. “The economy is now perhaps supercharged, but this happens artificially causing failure as the necessary structural reforms.”