Financial position

Notes on the financial position

End of March 2022

  • Assets: our assets stood at € 460.8 million.
  • Liabilities: the money we need to be able to pay all pensions (both now and in the future) is € 368.7 million.
  • Nominal funding ratio. The funding ratio is the ratio between the assets and the liabilities. The nominal funding ratio is 125.0%.
  • Policy funding ratio. The policy funding ratio is the average funding ratio over the past twelve months. The policy funding ratio is 119.2%. 

 

Obligation to build an additional buffer

If the assets are equal to the liabilities, so if there is exactly enough money to pay both present and future pensions, the funding ratio is 100%. This may look like enough, but this is not the case. Pension funds have to hold a buffer, because the future is uncertain. This means we ensure that we can still afford to pay everyone a pension even in case of financial setbacks. The buffer is calculated on the basis of government rules and may vary according to the degree of risk of the investments and the level of interest rates.

How large does the buffer have to be?

According to the rules set by the government, our assets must exceed our liabilities by 14.7% (at 31 December 2021). So we have to have sufficient assets to be able to pay the pensions, both now and in the future, plus a buffer of 14.7%. This means we will be able to cope with any unexpected decline in the assets. Currently, the policy coverage ratio of 119.2% (March 31 2022) is above the required coverage ratio. Therefore, the pension fund currently has sufficient financial buffers. 

Recovery plan

The pension fund has not had a reserve deficit since the third quarter of 2021.

Frequently asked questions

  • The Pension Fund has to prepare and submit a recovery plan to DNB every year for as long as the financial position continues to be inadequate.

  • Assumptions are involved in the calculations in the recovery plan, for instance regarding the development of interest rates and the return. How things actually develop through the year may vary from these assumptions. This is why the fund has to prepare an updated recovery plan each year.

  • The pension fund is considered to have recovered if its policy funding ratio is at least equal to the required funding ratio. The pension fund will then have sufficient financial buffers.

  • Pension funds have to hold a buffer, because the future is uncertain. This means we ensure that we can still afford to pay everyone a pension even in case of financial setbacks.

  • According to the rules set by the government, our assets must exceed our liabilities by 14.1% (May 2022). So we have to have sufficient assets to be able to pay the pensions, both now and in the future, plus a buffer of 14.7%. This means we will be able to cope with any unexpected decline in the assets. Currently, the policy coverage ratio of 121.0% (May 31, 2022) is above the required coverage ratio. Thus, the pension fund currently has sufficient financial buffers. 

  • Your pension may be reduced in the following two situations:

    • The policy funding ratio is less than the minimum required funding ratio (104.1 %) and the most recent measure of the current funding ratio is less than 100%. Curtailment in this case is unconditional, but it may be spread over time (up to 10 years). 
    • By implementing the agreed policy measures, the pension fund does not succeed in achieving the level of regulatory own funds (113.2%) within 10 years. This curtailment may also be spread over time (up to 10 years). The first curtailment is unconditional, subsequent curtailments are conditional.