In anticipation of these developments, a EUR 500 billion pension provision has been made (end-2007). The pension provision is the amount that is expected to be required for benefits in the future. The required pension provision is rising, as every year new participants join pension funds. Moreover, the size of the required provision also determined by the interest rate movement (under the new financial assessment framework: the interest rate term structure). When interest rates fall, a pension fund will require more money to be able to meet its future commitments. As a consequence, extra money will need to be added to the provision.
Featured statistic: EUR 21 billion
Date 13 May 2008
Pension benefits are rising rapidly. In the period 1997–2007, they went up 8.2 percent per year on average, with a peak in 2007 (+11.4 percent), to EUR 21 billion.