Dutch pension funds have reached their highest funding ratios since 2008 due to soaring interest rates, finds Aegon Asset Management and Aon. Aon puts the average funding ratio at 128%, as of end-August 2022, while Aegon marks the ratio at 124.5%.  Funding ratios have risen 16% year-on-year from 2021, despite significant investment losses.  

Dutch pension funds have reached their highest funding ratios since 2008 due to soaring interest rates, according to Aegon Asset Management and Aon. Aon sets the average funding ratio at 128%, as of end-August 2022, while Aegon marks it at 124.5%. The two firms use different calculation methods, resulting in the different figures.  

Despite the rise in funding ratios, losses have been significant. In the first six months of 2022, pension fund assets dropped by 299 billion.  

However, the increase in funding ratios do mean pension providers can compensate members for the high inflation experienced over the past year through indexing; however, many pensions do not plan on fully compensating members.  Frank Driessen, CEO, Wealth Solutions at Aon: “Indexing pensions by 13.6% will also lead to a decrease in funding ratios of the same scope. Most funds cannot afford this as they prefer to retain something of a buffer to prepare for the upcoming transition to a DC [defined contribution] system.” 

Source: https://www.ipe.com/news/dutch-funding-ratios-hit-highest-levels/10061894.article