Pressure is growing in the Netherlands for unions, companies and the government to agree on pensions reform as benefit cuts are a growing prospect at several schemes.

The average funding ratio of Dutch pension funds failed to improve in August, stalling at 109% according to consultancy groups Mercer and Aon Hewitt.

Both companies reported in monthly data updates that a limited increase of liabilities in the wake of a drop in interest rates had been almost fully compensated by returns on investments.

Last May, Dutch schemes’ funding – calculated as the average of pension funds’ monthly coverage ratios, with the application of the ultimate forward rate, during the past 12 months – stood at 108% on average.

Mercer said that the coverage ratio drawn from market rates – 107% at the end of August – hadn’t changed either in the past few months.

The consultancy noted that the 30-years swap rate – Dutch schemes’ main criterion for discounting liabilities – had fallen by five basis points to 1.47%, leading to a 0.8% rise in liabilities.

Aon, which took the overall swap rates into account, came out with a liabilities increase of 1%.

Frank Driessen, executive chairman at Aon Retirement and Investment, said the stalling recovery further increased the pressure for a new pensions system in the Netherlands, in particular because rights cuts at the large pension funds were still a possibility in 2020 and 2021.

Dutch pension assets increased by approximately 0.3% on average in August, Aon reported.

According to Mercer, based on the MSCI World index, worldwide holdings of developed markets equity gained 1.9% during the month, aided by a 50% hedge of the dollar, the pound and the yen. Without such a currency hedge, the increase would have been 1.6%.

The pensions adviser reported a 2.1% decline from emerging markets stock as a consequence of unrest in Turkey, Argentina and Brazil. Euro-denominated government bonds lost 0.6%, while and corporate bonds edged up by 0.1%.