At the end of last month, ABP only had 85 cents in cash per euro for future pension obligations. At PFZW it was just under 86 cents or a coverage ratio of almost 86 percent. PMT has not reached the temporarily relaxed minimum limit of almost 90 percent. It’s 90 percent. If the indicator is below the end of this year, cuts will have to be made.
Minister Koolmees (Social Affairs) had previously decided to temporarily relax the requirements for the funding quotas of the funds due to the “exceptional economic situation”. However, if the big funds have to be cut next year, it will still mean a reduction in pensions for millions of Dutch people.
“Whether or not this can be avoided, these discounts are of course a political decision,” says ABN Amro economist and pension expert Piet Rietman. “In theory, the minister could lower that 90% limit.”
Rietman expects the discounts to be imminent in 2021 based on the current economic climate: “These big funds ABP and PFZW now have five months to reach a funding rate of 85% to 90% and I can see that not so 1-2-3 happen. “
He explains that this is certainly not only due to the corona crisis: “This interest is actually a standard problem, it is already low and we expect the interest rate to fall even further. Then you actually need an incredibly large investment increase on the other hand. “
Consulting and research firm Aon reported earlier this month that some funds are still at risk of pension cuts. While the recovery in equity markets continued last month, interest rates also fell, which weighed on the numbers.
The researchers also warned that various pension funds may soon have to significantly increase their premiums or lower their pension provisions.