This means that pensions fall short of pension funds’ stated indexation ambitions, which are to link pensions to last year’s realised wage and price rises of approximately one per cent. Most members and pensioners will not be receiving indexation on their pension entitlements. At the same time, pension contributions by employers and employees in 2011 will rise from 16.3 to 16.9 per cent of employee remuneration.
The lag is caused by the financial position of the pension funds, which does not allow indexation at this moment. In 2010 the average funding ratio decreased from 109 to 107 percent. Even though favourable investment returns led to an increase in available assets, liabilities were pushed up even faster by low interest rates and the increased life expectancy of the Dutch.