Policy coverage ratio of Dutch funds increases to 106% in 2017

The policy coverage ratio of Dutch pension funds increased from 98 per cent to 106 per cent in 2017, according to Aon. This is above the legally required minimum of 104.3 per cent.

The policy coverage ratio, the average of the last 12 months, stood at 106 per cent in December 2017, unchanged from November. The policy coverage ratio is used to determine pension cuts and increases, so Aon expects some funds may soon be able to increase pension payments.

The average coverage ratio of the Dutch pension schemes increased during 2017 from 102 per cent to 108 per cent, although the coverage ratio fell by 1 per cent in December.

Aon called 2017 a stable year, in which the coverage ratio did not make any big leaps, but gradually increased throughout the entire year. The highest average coverage ratio was reached on 1 November, when it stood at 110 per cent.

The number of pension funds decreased in 2017 because of consolidation, although a few new general pension funds (APF) were established.

Many pension funds could transfer to an APF or an industry-wide pension funds. The remaining funds are the bigger schemes with an increasingly more professional trustee board. Aon estimates that eventually 100 pension schemes will remain.

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