ABP warns against pension cuts in 2021
The ABP pension fund, to which the education staff is affiliated, has had a better quarter, but warns against pension cuts in 2021. 'The ABP is still in the danger zone, the chance of a reduction next year is realistic', according to the fund.
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At the moment, the funding ratio is 85,2 percent reports the ABP today. The funding ratio is the ratio between how much money the fund has in cash and how much is needed to pay out future pensions. A funding ratio of 85 percent means that the fund now has 85 cents in cash for every euro of pension.
Corona crisis and low interest rates
Although the income from investments in the second quarter is better than in the first months of this year, ABP warns against pension cuts. "We are still noticing the effects of the corona crisis and the further fall in interest rates," the fund writes on their site. A pension discount is realistic because the funding ratio is currently still lower than 90 percent.
We are still feeling the effects of the corona crisis and the further fall in interest rates
Retired teaching staff therefore - despite the relaxation of Minister Wouter Koolmees for Social Affairs - still have a chance of being cut. Koolmees recently stated in a letter to the House of Representatives that he will not short funds in 2021 if they have a funding ratio of 90 percent or higher. In a debate in the House of Representatives on July 18, he said: 'That is precisely because of the special economic circumstances as a result of the corona crisis. It is the second year in a row that we are doing this,' said the minister.
Relax
Last year Koolmees also relaxed the rules because of the negotiations on a pension agreement. To the Chamber the minister said that he does not intend to relax any more. 'If you don't go back to 90 percent, the risk is very high that such a fund will become a sinking giant and so is actually getting worse off. The workers and the young are ultimately left with a shortage. And I do not want that.'
Whether the fund will actually cut will only become clear on the last day of this year. The relaxation of Koolmees will ensure that if a discount is needed, it is less extensive. 'In the coming months it should become clear how the corona crisis is developing worldwide and what impact this has on society and the economy', according to the ABP. "It is also impossible to predict how interest rates will behave."
Also read: What you need to know about the new pension agreement
