ABP and PFZW skip indexation
NETHERLANDS - Neither the large civil service pension fund ABP nor healthcare scheme PFZW will grant their members an indexation payment in 2009.
ABP’s financial position will not allow for a regular indexation or a one-off payment, the €190bn scheme for civil servants and teachers said.
The industry-wide scheme based its decision on its cover ratio of 103.9% on 1 November, adding it will start publishing its funding ratio on a monthly basis.
That said, ABP will review the issue before 1 July and reconsider compensation for inflation as Elco Brinkman, chairman at ABP, said: “We will seriously look into the situation once our recovery plan has been approved by pension regulator De Nederlandsche Bank.”
ABP had already decided in November to increase pensions contributions by 0.4%.
PFZW has now said it will keep its contributions at 22.5%, though it will refrain from paying compensation to cover the 3.75% average increase of the salary index this year.
“During the 40 years that we have existed, it has only happened once before that we could not pay a full indexation,” commented Peter Borgdorff, director of the €72bn scheme.
PFZW’s funding ratio of was 96% at the end over November.
Borgdorff also indicated he does not believe the combination of falling asset values and low long-term interest rates will change for the better any time soon.
ABP and PFZW must submit a short-term recovery plan to DNB before 1 April because both schemes’ funding ratios have dropped below the required minimum of 105%.