Large Dutch pension funds improved their financial position in the last quarter despite the turmoil in the financial markets, which created major concerns about the banking sector. According to the funds, this is good news for the millions of participants, who may be able to look forward to another pension increase next year. However, the funds do not yet dare to make predictions on this matter.
Joanne Kellermann, chair of the PFZW healthcare fund, notes that markets have been turbulent again in recent months “because of bank failures in the US and a timely bailout of a Swiss bank”. And that’s also why you think it’s good that PFZW’s funding ratio improves further. Now this indicator is 109.5 percent, which means that the PFZW has 1095 euros in cash for every euro of the promised pension.
Harmen van Wijnen, Chairman of the Board of Directors of the ABP Civil Servants Fund, is also positive. “I am pleased that after a turbulent investment year in 2022, we are profitable again this quarter with our investments. Our financial position is in good shape and we have some fat on our bones.” In ABP, the index rose to nearly 112 percent. At the end of November this year, his fund will assess, based on the financial situation at that time, whether pensions will change or remain the same next year.
Similar noises can be heard from PME and PMT metal boxes. The improved financial situation is particularly favorable because the money-related interest rates have decreased slightly. Last year, funds were also in a better position and were able to raise pensions for the first time in years, but that was precisely because interest rates were rising. We have seen stability in assets since the second half of 2022. Marcel Andringa, Executive Director of Balance Sheet and Asset Management at PME, notes that this trend will also continue in 2023.
However, Andringa does not dare to make any difficult predictions. “It is still somewhat uncertain how often and in what steps the ECB will continue to raise interest rates and what effect this will have on financial markets, among other things,” he says. He also confirmed that the International Monetary Fund (IMF) recently warned that interest rates may slowly return to pre-coronavirus levels in the second half of this decade. The latter will be unfavorable for pension funds. “So it remains important as a fund to take different scenarios into consideration.”
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