“The fact that the pensions of workers and retirees can finally be indexed is good news
“It is good news that the pensions of workers and retirees can finally be indexed,” says Douwe van der Zweep of the AOb.

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ABP increases pensions by almost 12 percent

The largest pension fund in the Netherlands, the ABP, will index heavily. As of January 2023, approximately three million government and education employees will receive an additional 11,96 percent.

“It is good news that the pensions of workers and retirees can finally be indexed,” responds Douwe van der Zweep of the AOb. “Certainly for colleagues who have been retired for some time, this increase is necessary to keep the fixed costs somewhat affordable.” For working people who pay pension money to ABP, this means that their benefit when they retire is significantly higher.

In July this year, ABP pensions were increased for the first time in almost fifteen years by 2,39 percent. On the fund site the indexation figures go back to 2009. Only in 2010 were pension benefits increased once by 0,28 percent. In the other years 'unfortunately we were unable to increase your pension', according to ABP. Incidentally, the state pension was increased annually during that period, says Van der Zweep. Next year, the state pension will be, just like it minimum wage, up by 10 percent.

In greenhouse

There are two reasons for the fact that we are now succeeding in largely compensating for inflation. Interest rates have risen, which means that ABP needs less in cash to be able to pay out the pensions. And in addition, the fund is allowed – thanks to a previous year adopted motion of Member of Parliament Gijs van Dijk (PvdA) – temporarily spend the money earlier.

This has to do with the current pension system. To be allowed to index, the so-called funding ratio*The funding ratio indicates how 'healthy' a pension fund is. It is the ratio between the assets (assets) of a fund and the pension obligations: all pensions to be paid out now and in the future. A funding ratio of 100% means that for every euro that the fund has to pay, there is exactly one euro in cash. If the funding ratio is lower, for example 90%, then there is only 90 euro cents for every euro that has to be paid. For example, if it is 110 percent, then there is 1,10 euros in cash for every euro that has to be paid. The funding ratio fluctuates, is determined monthly and is strongly dependent on the interest rate. exceed 110 percent. And most funds have not achieved that for a decade. “Pension funds that have indicated that they will switch to the new system are allowed – due to the Van Dijk motion – to index from 105 percent,” says Van der Zweep.

'The calculation rules of the current pension system keep an unnecessary amount of money on the shelf'

From January this space will disappear again. Minister for Pensions Carola Schouten decided that the original, strict indexation rules will apply again from 2023, wrote the Volkskrant earlier this month. Unless the new system is adopted by the House of Representatives. In that case, the funding ratio rules will lapse.

De AOb hopes, among other things, that the new pension system will soon become a reality. "Otherwise the lock will be closed again, is the expectation," says Van der Zweep. “The calculation rules of the current pension system keep an unnecessary amount of money on the shelf.”

Smooth transition

Yesterday, pension fund BPFBouw (800.000 participants) outwards that it will increase pensions by 14,52 percent. And earlier this month, Pensioenfonds Metaal & Techniek (PMT, with 1,4 million participants) and Pensioenfonds Zorg en Welzijn (PFZW, with 2,7 million participants) also indexed per next calendar year. PMT did so with 4,2 percent and PFZW with 6 percent. De Volkskrant stated that PFZW could also have increased by 10 percent, but that this fund, among other things, 'keeps money in reserve for a smooth transition to the new pension system'.

By way of comparison: the last quoted coverage ratio of BPFBouw is 140,9 percent. PFZW stands at 116,8 percent and PMT at 111,5 percent. ABP's current coverage ratio also looks favourable. On October 31, 2022, that was 125,5 percent.

Premium increase

In order to keep the pension accrual unchanged, ABP will increase the premium by 2022 percent from January 2. As usual, 70 percent of that premium is paid by employers and 30 percent by employees.

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De AOb is represented in it by three working and two retired colleagues Accountability body of the ABP.

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