The average Dutch pension funding ratio increased to 122 per cent in April, according to Aon Netherlands.

Aon’s Pensions Thermometer also found that the policy funding ratio, based on the average funding ratio over the past 12 months, remained stable at 112 per cent.

Over the month interest rates rose sharply again, particularly towards the end of the month Over the first 40 years, the yield curve rose by more than 40 basis points. Due to the higher interest rates, liabilities have fallen. On balance, liabilities fell by more than 8 per cent.

Markets were dominated by such sharp rises in interest rates in April, anticipating possible actions by central banks due to high inflation.

The US Consumer Price Index (CPI) rose 8.5 per cent year-over-year through March, the fastest pace since 1981. US Federal Reserve (Fed) chairman, Jay Powell, indicated that the Fed is prepared for a 50-basis point rate hike in May to address rising inflation.

However, policymakers at the European Central Bank (ECB), on the other hand, are somewhat divided in their approach to rising inflation. Some want a 'fixed end date' for net bond purchases and more an indication of interest rate hikes in the summer. Another part has a wait-and-see attitude due to geopolitical uncertainty.

Despite the fact that companies showed decent profit figures, future expectations are uncertain due to inflation and geopolitical tensions. Developed market equities and also listed real estate fell more than 5 per cent, in contrast to the small 1 per cent decline for emerging markets.

Only commodities showed a positive return of almost 8 per cent, with the strong rise in the US dollar of 4.8 per cent contributing about half. Rising interest rates once again led to negative corporate bond yields this month (-2.7 per cent). Long-term interest rates rose, causing the entire fixed-income portfolio to fall by more than 9 per cent. On an overall level, the portfolio achieved a negative return of approximately 6 per cent.

Share Story: