The funding ratio of Dutch pension fund ABP increased by 6.8 percentage points in the first quarter of 2022, it has revealed.

The funding ratio now stands at 117.4 per cent, up from 110.6 per cent at the end of 2021. It said the increase was caused by the rise in interest rates. As a result, ABP needs much less cash (-€47bn) to be able to pay all current and future pensions, which has more than made up for the loss on investments (-€21bn).

The policy funding ratio has also increased to 106.5 per cent up from 102.8 per cent at the end of the last quarter. The available assets in the fund are currently €531bn and all current and future pension benefits amount to €452bn.

Commenting, ABP chairman of the board, Harmen van Wijnen, said: “It was a quarter with great unrest about the ongoing coronavirus pandemic and certainly also the Russian invasion of Ukraine. That causes a lot of suffering in Ukraine, but also affects people outside of it. The stock markets are reacting to this: the financial markets are doing badly. ABP therefore consumes its assets. And yet ABP's funding ratio rose sharply. This is because our liabilities fell even more sharply due to the rise in interest rates.”

The results mean that an increase to pensions is one step closer, the fund said. However, the current policy funding ratio is not enough to be able to increase pensions. For this, the policy funding ratio must be at least 110 per cent. There is a proposal in parliament to lower this limit to 105 per cent as of 1 July 2022, which ABP supports.

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