The two largest Dutch pension funds, ABP and PFZW, do not have to cut pensions this year as their funding ratio exceeded the critical 90% mark on 31 December 2020.

Funding ratios improved markedly in the last two months of the year thanks to an equity market rally inspired by the approval of the Pfizer Biontech COVID-19 vaccine.

As recently as October, ABP and PFZW registered funding ratios of 87.0% and 87.4%, respectively, but thanks to the equity market rally their funding ratios have risen last seen in January 2020.

Earlier last year, social affairs minister Wouter Koolmees lowered the minimum required funding ratio pension funds would need to have to avoid cuts from 104.5% to 90%.

The 90% minimum fuding level will be valid until 2026, though a funding ratio of at least 95% is needed upon transition to the new defined contribution (DC)-based system.

Thanks to the end-of-year equity market rally, the pension fund for civil servants ABP’s “provisional funding ratio” had risen to 92% on 31 December, the fund said in a press release, confirming it does not need to cut pensions this year.

The funding ratio for the fund for healthcare workers PFZW was “far in excess of 91%” on the 31 December cut-off date, its president, Joanne Kellermann, said.

“We need a few more weeks to determine the final number, but it seems we have enough margin to say we don’t need to cut this year,” she added, hailing the fact the fund has managed to avoid mandatory cuts to pensions as “good news” for all the fund’s members.

“It was a very tough year for all people working in our sector so we are happy to be able to bring positive news on this point.”


The vaccine rally has not saved all pension funds from having to cut pensions, however. The fund for the food sector, Levensmiddelen, had a funding ratio of 86.9% at the end of November, and therefore almost certainly had a funding ratio below 90% at the end of the year.

The €7bn fund, however, still hopes it can avoid cuts. Daan Muusers, a trustee for the fund, told daily Het Financieele Dagblad it’s still too early to tell whether pensions really need to be cut because of a range of “uncertain factors”.

The fund will publish its provisional funding ratio in a couple of weeks’ time. “But before the numbers are final, it’s March. And you don’t know what will happen with politics in the meantime.” Muusers said.

Opposition party PvdA has repeatedly called for the government to rule out pension cuts for 2021. General elections will be held in the country in a little more than two months.

Schoonmaak, the €6bn pension fund for cleaners, may also have to cut pensions as its end-of-year provisional funding ratio is exactly 90%, according to data published by the Dutch pension fund association.

Two other funds, AVH and Reiswerk, have already announced they will cut pensions by 9% and 18%, respectively, as they are merging with other pension funds that have higher funding ratios.

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