The rise of the funding ratio – that is, available assets over liabilities – reflected upward movements of both equity prices and long-term interest rates. As a result, available assets increased in value, whereas liabilities decreased.
Equity prices went up between end-September and end-November. The AEX rose by 7%, while the MSCI World index increased by 6.8% (Table 3.1). This movement positively affected funds’ available assets. Conversely, the liabilities of pension funds decreased between end-September and end-November, mainly on account of a simultaneous rise of the long-term interest rate (15-year, Table 1.3), from 2.9% to 3.1%. When the long-term rate is high, pension funds need to make less provisions for future benefit payments. At the same time, a higher interest rate affects available assets adversely, as it causes a depreciation of the fixed-rate instrument portfolio. Over the review period, however, this negative effect was compensated by a rise in equity prices.