19 Oct 2023 at 00:03
Large pension funds are in better financial shape than a few months ago, which means that an increase in pensions is getting closer. But due to the transition to a new system, the funds are cautious about actually increasing.
The pension system will be significantly overhauled in the coming years. To be well prepared for this, the funds want to have enough money in cash.
“We must maintain sufficient reserves so that we can move healthily to the new pension scheme in 2027,” says Harmen van Wijnen, chairman of civil servants fund ABP, the largest fund in the Netherlands. “We would like to increase pensions and keep them in line with inflation, but it must be responsible.”
The call for an increase in pensions is great. For years, many pensions were not or hardly increased, even though there was inflation.
Last year, many funds were able to and did increase again for the first time in years. ABP, for example, achieved an increase of 12 percent. Yet many retirees want a new increase, because life has also become more expensive this year.
Funds have enough cash in hand
In addition to the changes to the pension system, an increase also depends on the coverage ratio of the funds. This coverage ratio shows whether a fund is able to meet future obligations. The coverage ratio must be at least 105 percent to be allowed to increase.
The five major funds – in addition to ABP, these are healthcare fund PFZW, bpfBOUW and metal funds PME and PMT – saw their coverage ratios increase to at least 114 percent in the third quarter. That is more than enough for an increase. The outlier is the building fund bpfBOUW, which has a coverage ratio of 128.8 percent.
Although the funds made losses on their investments, interest rates rose and that is beneficial for the funds. They have to put less money aside because of the higher interest rate.
The funds will decide in the course of next month whether they will indeed increase pension benefits and if so, by how much.
Image: 123RF
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PensioenenEconomie
2023-10-18 22:03:42
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