The average funding ratio of Dutch pension funds fell to 133 per cent in October from 136 per cent in September, according to Aon Netherlands.

A fall in interest rates led to this decline, and equity returns were slightly negative over the period.

Aon Netherlands’ Pensions Thermometer also showed that the indicative policy funding ratio, which is based on the average funding ratio over the previous 12 months, rose by 1 percentage point to 131 per cent in October.

In October, the risk-free interest rate over the first 30 years fell by an average of 24 basis points, while the Ultimate Forward Rate (UFR), used by pension funds to value future liabilities, stood at 2 per cent.

Due to the fall in interest rates, the value of the liabilities increased by more than 4 per cent, which, combined with an increase in assets in October, led to the 133 per cent funding ratio.

October saw a fall in global equities and emerging markets, while developed market equities rose slightly.

In the eurozone, interest rates fell due to the increased demand for safe government bonds.

As a result, the fixed income securities portfolio increased by 4 per cent and the total return of the portfolio was positive and amounted to 1.4 per cent.

Meanwhile, returns for defined contribution (DC) schemes varied on average between -0.2 and -2.1 per cent for all age cohorts this month, with differences between cohorts determined by falling interest rates.

This contributed more positively to the return for older participants with more bonds than the limited increase in equities.

Despite the decline in the average funding ratio in October, the financial position of funds still transferring to the new Dutch pension system looks strong, with the average funding ratio above 130 per cent.

"For participants who are with funds that will switch on 1 January 2027, things are looking good at the moment, but the last months of the year are exciting," Aon Netherlands wealth director, Frank Driessen, said.

“Based on the situation as of 1 October 2026, we estimate the average pension increase for participants of funds that will be transferred as of 1 January 2027 at 14 to 17 per cent.

“The final increase differs per age group. For pensioners, we estimate the possible increase at 12.5 to 25 per cent.”

Driessen added that these are significant percentages, which could mean a good start in the new system, but still warned that caution is advised.

“October has shown that the funding ratio can fall by several percentage points in a short period of time. The final increases are therefore not yet certain,” he cautioned.

"The financial position of pension funds in the final months of the year has a major impact on their starting position in the transition to the new pension system. Many funds have taken measures to partially protect themselves against fluctuations in the financial markets.

“This provides some certainty but does not completely eliminate the risks. The stronger the financial position at the time of entry, the more room there is to offer participants a good start in the new system.”

While most pension fund participants have already switched to the new pension system and a large proportion will follow on 1 January 2027, the transition at insurers and premium pension institutions appeared less smooth.

On 1 July 2026, more than half of the schemes still had to be converted, according to a transition update from De Nederlandsche Bank.

"This is a concern. The capacity in the market is limited, and processes require time and attention. We also call for action to be taken," Driessen concluded.

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