Steep rises in funding ratios for the Philips, Unilever and KPN pension funds in 2021 will enable them to compensate for missed indexation in previous years. But only the Unilever fund is in a position to fully make up for any missed indexation.

The average funding ratio of Philips Pensioenfonds over the past 12 months topped 124% at the end of December 2021 for the first time in more than 10 years.

Above that threshold, Philips can compensate for missed indexation from previous years. The announcement follows similar ones from the closed Unilever fund and that of telecoms provider KPN.

KPN and Philips are yet to announce the exact amounts of additional inflation compensation. Unlike the Unilever fund, which had a funding ratio of more than 140% at the end of last year, KPN and Philips are unlikely to be able to compensate for all indexation arrears their members accumulated over the years.

The indexation missed by the 82,000 pensioners and inactive members of the Philips fund amounts to a 12.6% loss in purchasing power of at the end of 2021. The fund’s 14,000 active members are even running 19.2% behind.

KPN said its ability to partially compensate for missed indexation “is quite unique, because in the Netherlands there are not many funds that are in the position to do this”.

The fund’s experts “are currently investigating how to go about this”, KPN added in a news release on its website. The Philips fund will publish its final indexation decision in March.

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