Dutch pension funding ratio falls to 122% - Aon Netherlands

The average funding ratio of Dutch pension funds fell to 122 per cent in June, according to Aon Netherlands.

Aon’s Pension Thermometer also found that the policy funding ratio, based on the average funding ratio over the past 12 months, rose to 115 per cent in June.
Over the month, central bank policy dominated financial markets in their fight against inflation. Annual inflation reached a record high in the US and eurozone at 8.6 per cent and 8.1 per cent, respectively.

For the financial markets, a bad cocktail of record inflation and very rapid rise in interest rates and further rising tension in the conflict in Ukraine emerged in June, making the chance of a recession increasingly likely due to the strong intervention of central banks.

All risky investments performed poorly. Developed market equities fell more than 6 per cent and emerging market equities fell 4.3 per cent. Real estate also fell by about 6 per cent. Rising interest rates and rising credit risk led to negative corporate bond yields (-3.5 per cent), high yield (-7.3 per cent) and emerging market debt (-7.3 per cent) in June. Long-term interest rates rose, causing the entire fixed-income portfolio to fall by more than 6 per cent. On an overall level, the portfolio achieved a negative return of approximately 6.2 per cent.

In addition, interest rates maintained their upward trend in June. Over the first 40 years, the yield curve rose by about 28 basis points. Due to the higher interest rates, liabilities have fallen. On balance, liabilities decreased by approximately 4.7 per cent.

Last week, large Dutch pension funds such as PME, ABP and PRWI announced that they would make use of the General Administrative Order (AMvB), which allows funds to index on the basis of the relaxed rules from 1 July.

"We still see hesitation with funds; they are afraid to create expectations," Aon Netherlands CEO Wealth Solutions, Frank Driessen, said. "But if there is one sheep over the dam, more may follow. We also understand that it is a difficult trade-off. The transition to the new system also requires money. On the other hand, pensioners and employees feel the consequences of high inflation in their wallets on a daily basis.”

    Share Story:

Recent Stories


An overview of growth investing
European Pensions Editor, Natalie Tuck, speaks to American Century Investments (ACI), Vice President, Senior Client Portfolio Manager, Kevin Lewis on growth investing.

They discuss how it has performed in 2021, and its outlook, going forward. They also cover ACI’s differentiated growth approach to the investment universe, and how this capitalises on market inefficiencies, as well as how ACI’s team is equipped to invest in this manner.
Podcast: The benefits of private equity in pension fund portfolios
The outbreak of the Covid-19 pandemic, in which stock markets have seen increased volatility, combined with global low interest rates has led to alternative asset classes rising in popularity. Private equity is one of the top runners in this category, and for good reason.

In this podcast, Munich Private Equity Partners Managing Director, Christopher Bär, chats to European Pensions Editor, Natalie Tuck, about the benefits private equity investments can bring to pension fund portfolios and the best approach to take.

Podcast - The power of three: Using Common Contractual Funds to improve tax outcomes for investors
Large asset owners are still investing in equities in a way where they are taxed on their income. The implication is that they get a poorer return. They need to, and can, improve this, but how?

In this podcast, AMX Head of Client and Manager Development, Aaron Overy, and AMX Product Tax Specialist, Kevin Duggan, discuss with European Pensions Editor, Natalie Tuck, about three options to help ensure good withholding tax outcomes for institutional investors.

Mitigating risk
BNP Paribas Asset Management’s head of pension solutions, Julien Halfon, discusses equity hedging with Laura Blows