The average Dutch pension funding ratio rose to 120 per cent in June, according to Aon Netherlands.

Aon’s Pension Thermometer found that good equity returns cushioned the effects of a fall in interest rates. The indicative policy funding ratio, based on the average funding ratio over the past twelve months, rose to 119 per cent in June.

Regarding investments in June, developed market stocks rose by almost 3 per cent and emerging markets rose by 5.3 per cent. On average, interest rates fell by a few basis points, causing the fixed-income portfolio to rise by 0.5 per cent. Riskier bonds also rose: corporate bonds (0.7 per cent), high yield (0.5 per cent) and emerging markets hard currency (0.5 per cent). The portfolio's total return was 2 per cent for the month, Aon said.

In terms of interest rates, on balance, the risk-free interest rate fell by an average of 7 basis points over the first 40 years in the space of a month. As a result of the rise in interest rates, the value of liabilities increased by approximately 1 per cent. This, taken into account with the 2 per cent increase in assets in June, led the funding ratio to increase by approximately 1 per cent on balance.

Aon also provided an update on schemes’ transition to the new Dutch pension system. The intermediate deadlines for the transition plan of 1 January 2025 and the implementation plan of 1 July 2025 are fast approaching.

The consultancy firm advised social partners and pension funds to include associations of pensioners or former participants in the plans.

"Involve the association of pensioners or deferred members in decisions at an early stage, so that there is no surprise effect once the transition plan is in place," Aon Netherlands Wealth Solutions director, Frank Driessen, said.

He continued: "We are on the eve of the biggest transition in our pension system ever. For us as a sector, this means a great responsibility to include the participants in all the changes. We have to do our utmost to explain the chosen solution to the participant."

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