PDN aims to increase your pension every year and to allow it to grow in line with inflation or wage rises. We refer to this increase as “indexation.” The financial position of the fund and the statutory regulations that apply to indexation play a major role during the annual decision-making process in this regard. When considering the pension fund's financial position, we look at the ratio between its capital and all current and future pension commitments. We refer to this as the funding level.
The pension fund's Board can only decide to index (or partially index) if the funding level is 110% or more. The policy funding level is the average funding level over the past twelve months. The policy funding level at the end of December 2018 was 109.3%. That is why no indexation can be granted to the payable pensions and accrued pension entitlements in 2019.
The decision not to apply indexing reduces the purchasing power of our pensions and the pension entitlements. If, for example, average prices rise by 2% a year (inflation) and no indexing is applied for ten years, your pension will be worth about 20% less after this ten-year period.
If you are still accruing your pension and would like to know about the implications of the decision not to index for your pension, log in to 'My PDN pension' and click 'Pension Risk'.
If you would like to know more about increases (indexation) at PDN, then click here.
If you would like to see how your pension or pension accrual has been indexed in recent years, then click here.