The funds must meet a minimum required coverage ratio, which for the most funds on or slightly above the 104,2 percent. The coverage ratio is the ratio between the assets and liabilities of pension funds. The percentage shows the extent to which a fund is able to now and in the future to pay pensions.
Funds with a funding shortfall each year draw up a recovery plan with information about the measures they will take.
If the funds on december 31, under a so-called critical limit stuck, need the funds, the pensions decrease. This has both implications for people who already retired are, as well as for participants who still accrue pension.
ABP
the funding ratio of The largest pension fund in the Netherlands remained stable in the third quarter. The current funding ratio of the fund for civil servants and teaching staff has increased slightly from 90,5% to 90,7 percent.
The beleidsdekkingsgraad of ABP, the average funding ratio over the past twelve months, came in the third quarter and 92,5 percent. A quarter earlier, it was 94,4%.
Although the fund because of the lower interest rates in the third quarter more to the side had to turn it off, improved the position by investment returns.
“Our funding ratio is depicted in the first three quarters of 2016 a stable picture: just above the 90 percent,” says ABP-president, Corien Wortmann-Kool. “If we did that in the fourth quarter can all hold, then we will have the pensions in 2017 do not have to decrease.”
If the fund at the end of the year above the critical limit of approximately 90 percent, have ABP, not in the pensions to be cut. “The coming months are so exciting,” said Wortmann-Kool.
ABP think at the end of January to be able to log in, or the pensions from the second half of 2017 reduced. Incidentally, expect ABP over the next five years not or hardly be able to have the pension increase (indexing).
PFZW
the Pension fund for Care and Welfare (PFZW) reports an increase of the current funding ratio by 0.2 percentage points. That came in the third quarter amounted to 89,2%. The beleidsdekkingsgraad, however, decreased to 90.8 percent.
“The third quarter of 2016 at PFZW approximately the same image as the quarters for this: a low rate of interest and a beleidsdekkingsgraad thereby again slightly deteriorated”, the responding director Peter Borgdorff.
“The chance that PFZW, the pension in 2017 to reduce, has a strong presence,” said the fund. If the actual funding ratio at the end of the year at the current level, then the pensions are just not cut to be. For this fund applies a critical limit of about 87 percent. Indexation next year is excluded.
PME
The Pension fund of the Metal (PME) states that the coverage ratio stable, but low. The current funding ratio increased slightly to 91 percent. The beleidsdekkingsgraad fell from 93,7% to 92,4%.
“By the ever further fall in interest rates and the required understanding to put the good returns are not sufficient flesh on the bones”, explains chairman Eric Uijen of PME.
“The coverage ratio remains close to the critical limit of around 90 percent. That means that we are concerned to continue to make a necessary reduction of the pensions in 2017.” The fund is therefore already working participants and retirees to prepare for a “probable decrease”.
PMT
The actual funding ratio of the Pension fund Metal and Technology (PMT) has increased in the last quarter by 0.1% to 92,1%. The beleidsdekkingsgraad fell in the same period to 93,3 percent.
“We can achieve good investment returns, but by the ever further fall in interest rates and the required understanding, increases the funding ratio is not enough,” says PMT president Jan Berghuis. “The chance of shortening it is still fiftyfifty,” says Berghuis.
He criticism of the Dutch rules for pension funds. “We are, as I have the impression, the only country in Europe with such strict rules. In this way, we are not in need of repair.”
BpfBOUW
BpfBOUW of the five major pension funds, the only fund that meets the legal minimum. The beleidsdekkingsgraad was at the end of september with 105,5 percent, 1.1 percentage point lower than in June. The current funding ratio was 105 percent.
“What the financial position of BpfBOUW, we expect that in 2017 remains stable, but is insufficient for the pensions to be able to index,” says ceo Jan Noise.
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