Featured statistic: EUR 493 billion

News
Date 9 July 2008

At year-end 2007, the value of the Dutch pension funds’ technical provisions stood at approximately EUR 493 billion. Pension funds calculate these technical provisions to be able to estimate what they are required to pay to future pensioners.

Chart Technical provisions of pension funds (EUR billion)

 

 

 

 

 

 

 

 

 

 

The size of this item is dependent on various factors, two important ones being the capital market rates and the pass-through of wage growth or price increases in future pension benefits. The capital market rates rise in 2007 had a downward effect, as higher rates mean that a pension fund can put aside less money to be able to fulfil its future commitments.  This is favourable for a pension fund’s financial buffer: the General Reserve. The higher its financial buffer, the more opportunities a pension fund has to pass through wage or price increases in its pension benefits. This, in turn, has an upward effect on its technical provisions, which are funded from its General Reserve.

Also because the first factor surpassed the second factor, the value of the technical provisions fell by EUR 14 billion in 2007.