The coverage ratio of the Dutch pension fund for people working in the government and education sector, Stichting Pensioenfonds ABP (ABP), has reported that its coverage ratio dropped to 88.7 per cent over February.
It is a fall of 5.4 per cent since the end of January when the coverage ratio was 94.1 per cent. In addition, its policy funding ratio declined by 1 per cent to 94.4 per cent.
The fund said it was “disappointing” for ABP’s financial position. Its assets declined due to stock market turmoil as a result of the coronavirus and existing trade conflicts, it said.
In a statement for members the fund said: “It is still too early to say what exactly this means for you. The funding ratio on December 31 of this year will determine whether we should reduce pensions in 2021 or not. This means that developments over the next 10 months will partly determine the ultimate funding ratio. It is clear that there is a chance of a reduction in 2021.”
ABP is not the only Dutch fund as Aon’s most recent pension thermometer revealed that the average Dutch pension fund coverage ratio for February was 95 per cent, down from 101 per cent in January.
In addition, Stichting Pensioenfonds Zorg en Welzijn (PFZW), the second largest pension fund in the Netherlands, has told members that it is not yet possible to say what impact the current crisis will have on pensions. However, it warned that it is seeing its current funding ratio fall due to the developments.
It also told members that any decision on a pension reduction will be based on the 31 December coverage ratio, whilst reassuring members that their pension will not change this year.
It also said that it wants to reform the Dutch pension system: “We are committed to reforming our pension system, making it less sensitive to these daily financial prices. Discussions about this are now underway and the first steps have been taken to ensure that the Netherlands has a future-proof, good and affordable pension.”
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