Business · Economy · 4 hrs ago
ABP and PME pension funds’ coverage ratios rise above 130%
Dutch pension funds ABP and PME have strengthened their finances, with both funds’ coverage ratios rising above 130%.
A coverage ratio compares a fund’s assets with the money it needs to pay promised pensions.
Higher interest rates helped push the ratios up in recent months, because funds need less money set aside to meet future payments.
The stronger position means more money may be available to distribute when the funds move to the Netherlands’ new pension system.
ABP and PME are due to make that move on January 1, and participants will have individual pension accounts under the new system.
PME says pensions could rise by 12.6% in 2027 if the economy and interest rates do not change sharply; the amount available to distribute will depend on the funds’ coverage ratios on December 31.
ABP and PME’s funding ratios rose above 130% in recent months as interest rates increased.
ABP’s ratio rose from 126.9% to 132.2%, while PME’s rose from 127.7% to 132.8%.
The funds say their stronger financial positions put them in a good position ahead of their move to the new pension system.
PME says eligible pensioners could receive a 12.6% increase in 2027 if the economy and interest rates do not fluctuate significantly.
The amount available to distribute will depend on the funds’ coverage ratios on 31 December.
- Who
- The ABP and PME pension funds and their participants.
- What
- Their funding ratios rose above 130%, improving their financial position ahead of the transition to a new pension system.
- When
- The ratios rose in recent months; both funds are due to switch systems on 1 January next year.
- Where
- The Netherlands.
- Why
- Rising interest rates mean the funds need less money to meet their promised pension payments.
This story does not have two clearly opposing sides.
Rising interest rates helped the funds’ coverage ratios continue to increase.
ABP’s ratio rose from 126.9% to 132.2%, and PME’s rose from 127.7% to 132.8%.
The amount available to distribute will depend on the funds’ coverage ratios on this date.
ABP and PME are due to move to the new pension system.
PME pensioners could receive a 12.6% pension increase if the economy and interest rates do not fluctuate significantly.
- ABP coverage ratio
- Rose from 126.9% to 132.2%
- PME coverage ratio
- Rose from 127.7% to 132.8%
- PME possible increase
- 12.6% in 2027, conditional on economic and interest-rate stability
- System transition
- 1 January next year
What people are saying
On the financial markets, the third quarter was unsettled again. The war in the Middle East flared up and interest rates rose sharply due to ever-increasing government debts in, among others, the United States and France.
As a result, the increase in the coverage ratio continued in the third quarter.
If the economy and interest rates do not show major fluctuations, our pensioner participants can count on a 12.6 percent increase in their pension in 2027.