On June 22, PDN’s Board decided to award partial indexation to all members as of July 1, 2022. This indexation applies to the year 2021. This means an actual increase of 1.64% for pensioners’ payable pensions and deferred members’ accrued pensions, and an increase of 1% for employees’ accrued pensions.
The Board is delighted that it has been able to reach this decision, certainly as no increase had been possible for so long. At the same time, the Board is well aware that this will not meet everyone’s expectations.
Recently introduced legislative changes enable pension funds to increase pensions earlier over the year 2021. PDN has decided to use this option. In reaching such a decision, a pension fund board must not only balance the interests of all members (pensioners, deferred members, and employees), but must also take into account what will happen to the fund in the near future. For instance, PDN’s Board must take several important decisions on the introduction of the new pension system by the end of the year. There is still a lack of clarity over many issues, including that the fund does not know whether it needs to retain certain reserves for the transition to the new system, or how high these would need to be. It is also not yet known whether certain groups of members will need to be compensated if they end up losing out in the transition to the new system. In addition, it is impossible to predict whether the cost of living will continue to rise in 2023 and 2024 (inflation) or what impact this would have on salary developments. These are just a few examples of the complex issues involved.
In reaching its decision, the Board felt it was important to adhere as closely as possible to how increases were made in the past. When calculating the percentage, however, the change in law allowed an increase in pensions at a policy funding level as low as 105%, which had a positive effect on the amount of the increase.
There will be more clarity about the new pension system by December of this year, and the Board will have more insight into everything it needs to take into account. The Board can then decide whether it can increase pensions as of January 1, 2023, and if so, by what percentage.