Pension funds must meet the statutory minimum funding ratio, which for most of them is 104.2% or slightly above. The policy funding ratios of more than half (61%) are currently below their statutory minimum. At 31 December 2016, these pension funds represented around 4.1 million active members and around 2.4 million retirees. Pension funds must also meet a statutory required funding ratio that depends on the risks inherent in their investment policy. Pension funds whose policy funding ratio is below their required funding ratio are obliged to draw up a recovery plan, outlining the measures they will be taking to improve their financial position, and review the plan each year. As a last resort, these funds may decide to curtail pension benefits.
Dutch pension funds' policy funding ratio at 97.5% at year-end 2016
- Statistical News Release
Date 31 January 2017
The Dutch pension funds' average policy funding ratio dropped by 0.6% to 97.5% in the final quarter of 2016. This means it was below the minimum required funding ratio at 31 December. The policy funding ratio is the funding ratio on which pension funds must base their policy decisions. It is calculated as the average of the funding ratios for the past twelve months. Over the final quarter of 2016, the funding ratio based on daily market information – the ratio of pension funds’ assets to pension liabilities – went up 5.3 percentage points to 102.1%, returning to the level seen at year-end 2015.