Average Dutch funding ratio stabilises at 111% - Aon

The average Dutch funding ratio stabilised at 111 per cent over November, according to Aon Netherlands.

The latest figures from its Pension Thermometer, found that the funding ratio decreased by 1 percentage point month on month. The average policy funding ratio of schemes, which is the average funding ratio over a 12-month period, increased from 106 per cent to 107 per cent.

Over the month, interest rates fell across the board. On balance, the risk-free interest rate fell by an average of 9 basis points over the first 40 years in one month. As a result, liabilities rose by 1.4 per cent.

Regarding the stock markets, sentiment over the month declined. A strong increase in the number of coronavirus infections and the arrival of the new Omicrion variant led to new measures in European countries to contain the spread of the coronavirus.

Equities were down about 0.5 per cent, developed markets equities were down 0.5 per cent and emerging markets equities were down 1.5 per cent. Expected economic slowdown due to coronavirus measures caused commodities to fall by 8 per cent, but real estate stocks rose 1.5 per cent due to inflation and lower interest rates, as did inflation-linked bonds. The fall in interest rates resulted in a positive return on the fixed-income portfolio of 2.2 per cent, despite negative results on high yield (-1.5 per cent) and EMD (-2.2 per cent). On a total level, the portfolio achieved a return of approximately 1 per cent.

Aon said that investors are concerned about the effects on economic developments, as well as the longer-term economic effects of climate change. COP 26, the two-week climate change conference, ended with a deal to cut carbon emissions, although no steps were taken to limit global warming to 1.5 degrees Celsius and completely 'phase out' coal production.

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