The coverage ratio of the Netherlands’ biggest pension fund ABP fell with 6% to 106% in July. Due to the bad performance of the financial markets in August, ABP’s coverage ratio is currently below 100%.
However, the public sector pension fund said the low coverage ratio will at the moment not affect the pensions. Premium and indexation decisions are usually taken in November and it is therefore too early to make any predictions about the coverage ratio at that time, ABP explained.
At the end of the year ABP will review its recovery plan, which outlines how the fund is planning to reach the required level of 105% by 2013. Previously the fund was ahead of the plan and if this remains the case at the end of the year, the trustee board will not have to decide on any additional steps.
The strong decline in the coverage ratio is due to a lower interest rate and the lower rates on the financial markets, ABP said.
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