Dutch pension fund PME could increase pension benefits for retirees by 12.6% when it transfers to the new pension system, based on its funding ratio at the end of July, according to IPE’s sister publication PensioenPro.
The projection is based on a funding ratio of 129.4% at the end of July. This had risen to 132.8% by the end of September, despite a negative investment return in the third quarter, as rising interest rates reduced the amount of capital PME needed to reserve for current and future pension liabilities.
If PME maintains its current funding ratio, the increase could be higher. The fund took measures earlier this year to protect its funding ratio against falling equity markets.
PME could not provide an exact forecast for active and deferred members. Increases could differ by several percentage points between participant groups, depending partly on the funding ratio at the point of transfer.
The first 10 percentage points of funding surplus will be distributed equally among all participants, with the remainder allocated according to age using the statutory 10-year standard method.
The fund has decided against a separate indexation increase under the existing financial assessment framework before the transition, arguing that this would make little material difference to members while complicating implementation and communication.
Part of the overall increase at transfer can be regarded as compensation for inflation, a spokesperson said.
A 12.6% increase would exceed the 8.3% increase received by pensioners at fellow metal sector fund PMT when it transferred to the new system earlier this year. PMT had a funding ratio of 122.3% at the end of 2025.
The funding ratio of ABP, another large Dutch pension fund yet to transfer, also stood at 132.8% at the end of September. However, ABP has declined to forecast increases, saying these depend on individual circumstances as well as the funding ratio.
Both PME and ABP recorded negative investment returns in the third quarter, of -4.8% and -4.3%, respectively.
At PME, losses on the matching portfolio resulting from rising interest rates drove the negative return, while the increase in rates nevertheless improved its funding ratio.
