Despite strong equity returns, the funding ratio of Pensioenfonds Detailhandel decreased by 1.2 percentage points in 2024 due to a fall in the discount rate, while the scheme has yet to confirm its transition date under the new Future of Pensions Act (Wtp).

In its annual report, the pension fund for workers in the retail sector revealed a total investment return of 9.2 per cent in 2024, with equities performing particularly strongly, gaining over 25 per cent.

However, a slight drop in the discount rate from 2.2 per cent to 2 per cent meant that it became more costly to secure future pension benefits, the fund noted.

As a result, the fund's coverage ratio declined from 118.4 per cent to 117.2 per cent.

This decrease was attributed to a lower interest rate and a 1.3 per cent increase in pensions at the end of 2024 - although notably less than the 3.3 per cent rise granted in 2023.

Other changes impacting funding levels included updated calculation rules and a decision to grant pension accrual to former participants with a history of disability.

In 2024, employees accrued pension rights on 1.622 per cent of their salary, a rate that will remain unchanged in 2025. The total contribution rate also remained steady at 24.75 per cent, shared between employer and employee.

Last year also saw pension accrual begin at age 18, rather than 20 - a change the fund welcomed, especially in the retail sector where many workers are young.

In addition, adjustments were made to the orphan's pension in line with the new Wtp legislation.

Previously, entitlement ended at age 18 unless the child was in education.

However, since 1 January 2025, orphan pensions have been paid until age 25 regardless of study status.

Meanwhile, the fund confirmed that extensive work took place behind the scenes in 2024 to prepare for the Wtp transition.

A key milestone was reached in the summer, when social partners agreed on the transition plan, which outlined the fund's approach and has since been published on its website.

Work also progressed on the implementation and communication plans, while discussions were held with De Nederlandsche Bank (DNB), which has already started assessing parts of the proposed new scheme.

The fund noted that successful delivery of the transition will require "close coordination" between the board, social partners, regulators, and service providers.

However, the transition date has not yet been finalised.

Pensioenfonds Detailhandel stated that a decision would be made in September 2025 on whether to transition on 1 January 2026.

In addition to the financial update, the fund also reported developments in responsible investment and sustainability during 2024.

A three-day 'participants dialogue' was held, allowing members to discuss responsible investment themes. This resulted in 49 recommendations, all of which were adopted by the board.

Elsewhere, new sustainability guidelines were introduced for investments in real estate and green bonds.

The fund also adopted stricter benchmarks for its investment portfolio, giving greater weight to countries and companies performing well on the UN Sustainable Development Goals (SDGs).

Its real estate strategy evolved, with the traditional benchmark replaced by a climate-sensitive index focused on lowering emissions, reducing energy use, and increasing green certifications.

As a result, the fund's real estate portfolio once again outperformed the GRESB benchmark in 2024.

In terms of collaborative initiatives, the fund ended its membership in the UN-convened Net-Zero Asset Owner Alliance (NZAOA), but remained part of other partnerships, such as GREEN, which promotes sustainable real estate.

Pensioenfonds Detailhandel also continued to expand its impact investment portfolio in 2024.

Through specialised asset managers, it provided loans to businesses in the Netherlands, Europe, and emerging markets that are improving their sustainability performance or scaling proven sustainable solutions.

Looking ahead, the fund said it would partner with academic researchers to explore participants' appetite for further impact investments.

Finally, the fund announced the launch of its new personal pension portal in February 2025, providing members with improved visibility of their pension accruals and projected outcomes.

A new website is also in development and is expected to go live in the autumn.

---