The Netherlands’ largest pension fund, ABP, has reported that its funding ratio has increased by approximately 4 per cent in the second quarter of 2021.

Publishing its quarterly update, ABP said its funding ratio now stands at 104.5 per cent, up from just above 100 per cent at the end of March 2021. It attributed the rise in the funding ratio to the performance of its investments, which is different to the rise in interest rates that positively affected the funding ratio in the first quarter.

ABP achieved a return of 4.6 per cent on its investments in the second quarter, bringing its available capital to €523bn.

It said the chance of a reduction to pensions is small because of the current funding ratio being well away from the critical limit of 90 per cent. However, the fund said that this year pensions will remain the same and is also expected to be the case in 2022.

“ABP does not expect to be able to increase pensions next year in line with the price increase (also known as indexation), because the policy funding ratio is still too low,” it said.

The policy funding ratio, which is the average funding ratio over the past 12 months, is currently at 94.6 per cent. A partial increase in pensions requires a policy funding ratio above 110%. For a full increase, the limit is 123%.

In addition, ABP revealed that in the second quarter, it welcomed 16,769 new participants. At the same time, 10,557 people retired from April to June.

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