Climbing interest rates have increased the funding ratios of the Netherlands’ four largest pension funds after years of declining rates. Interest rates began to turn at the New Year and were partly boosted by US President Joe Biden’s $1.9 billion economic stimulus programme in February.

Just a few months ago, pension funds were facing a situation where the probability of pension cuts was high. However, rising stock prices, particularly as 2020 came to a close, saved funds from having to make cuts.

According to quarterly figures from the largest pension funds, their coverage rations rose. ABP’s numbers rose to just over 100%, up from around 93%, while ‘Pensioenfonds Zorg en Welzijn’ grew to nearly 98%, from less than 93% in December. PMT rose to 99% from 95% while PME settled in at 101.7%, up from 97% at the end of 2020.

Despite the welcome bump, pension fund chairpersons remain cautiously optimistic, with Corien Wortmann-Kool, remarking, “This is, in itself, good news, but the economic outlook is still uncertain.”

The pension fund for supermarket employees, ‘Pensioenfonds Levensmiddelen’, though, will face cuts this year, as the only relatively-large fund to do so. This is the case because its funding ratio was below 90% at the end of December 2020.