PDN's funding level saw a very positive development in the first quarter of 2022, rising to 123.1%. This represents an increase of 7.6% compared with the funding level as it stood at the end of 2021. The funding level shows whether PDN has enough cash in hand to pay the pensions now and in the future. The funding level is determined at the end of each month.
With regard to a decision on increasing pensions, also known as indexation, a pension fund must take into account what is known as the policy funding level. This is the average funding level over the past twelve months. Because it is an average, the policy funding level does not rise and fall as quickly from month to month and therefor provides a more stable picture of our financial situation. Our policy funding level also increased, from 108.9% at the end of 2021 to 112.5% at the end of the first quarter.
In previous news items and in Edith Schippers' podcast (in Dutch), we discussed amended legislation that allows pension funds, under certain conditions, to be able to increase pensions from a policy funding level of 105%. The indexation rules specified by the government are temporarily adjusted for this purpose. However, the pension fund’s Board must make a well-considered decision to do so.
PDN’s Board explicitly aims to index if it is responsible to do so. The Board is obliged to balance the interests of all generations of participants in this consideration. In any case, this takes into account the indexation arrears of all members in general and those of pensioners in particular. However, future liabilities must also be considered, as well as a further interpretation of the Future of Pensions Act. For example, pension indexation must not lead to an uncertain financial situation in the future.
The Board is expected to decide on June 22 whether indexation from July 1, 2022 is justified based on the adjusted indexation rules.
We will regularly inform you of developments through this website, news reports, the PDN Magazine, and other media.