Statistical News Release: Financial position of Dutch pension funds deteriorated further in the third quarter of 2019
The financial position of Dutch pension funds deteriorated further in the third quarter of 2019. Due mainly to declining interest rates in financial markets, they saw their liabilities go up by EUR 125 billion to EUR 1,588 billion. Claims also went up amidst lower interest rates and higher equity prices and foreign exchange rates, by EUR 70 billion to EUR 1,558 billion. With liabilities growth outstripping claims growth, pension funds faced worsened financial positions.
Funding ratio of pension funds down to 98.1%
The pension funds’ funding ratio slumped by nearly 4 percentage points, to 98.1 percent at the end of the third quarter (see Chart 1). The funding ratio reflects a pension fund’s current financial position, expressing the ratio between available assets and liabilities.
The policy funding ratio, which is the average of the funding ratios for the past twelve months, likewise fell, from 106.0 percent to 103.1 percent. Both the funding ratio and the policy funding ratio as at 31 December are relevant factors in a pension fund's decision about benefit curtailments based on its minimum required own funds.
Pension funds whose policy funding ratio falls short of the statutory minimum represent more than 60% of all pension fund members
The number of members of pension funds whose policy funding ratio are below the 104.2 percent statutory minimum went up in the third quarter, from 11.4 million to 12.1 million. At present, this represents 63 percent of all members (see Chart 2), and 70 pension funds. The policy funding ratios of 56 pension funds are above 104.2 percent but below the 110 percent threshold required for full or partial indexation. They represent 5.1 million members. Lastly, 78 pension funds have policy funding ratios in excess of 110 percent, meaning they are permitted to provide for full or partial indexation. They represent 2 million members.
The pension rights of all members accrue under occupational pension schemes. They supplement Dutch state pension benefits. Also, an individual may have pension rights administered by multiple pension funds as an active member, a deferred member and a pensioner.
We used the following statistics to compile this news release: