NETHERLANDS - Dutch pension funds have seen their recovery plans pull back considerably faster than anticipated last year, according to pensions regulator De Nederlandsche Bank.
An assessment of 300 of the 340 submitted recovery plans revealed the average cover ratio rose by approximately 10 percentage points to 106.7% on average at year-end, said Femke de Vries, supervisory director at DNB, during a congress on topical pensions issues.
That said, she noted these new figures for increased life expectancy have yet to be taken into account so the actual cover ratio could be slightly lower in some cases.
Some pension funds have already factored in new longevity figures by making financial provisions equate to up to 6% of their cover ratio.
De Vries indicated that of the 300 assessed pension funds, approximately 100 still have a cover ratio of less than 105% while 140 schemes only have a shortfall of the required financial reserves.
Its evaluation of pensions recovery plans should be completed in May, said a DNB spokesman.
At the same time, the DNB director further noted the assessment process had shown many pension funds are still vulnerable when it comes to maintaining the required funding levels because they are often seen as leaning too much on just one steering instrument, such as the promise of the sponsoring company to fill in a financial shortfall.
In her opinion, pension funds should make better use of continuity analysis for setting up contingency plans.
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