The average Dutch funding ratio rose to 118 per cent in March, according to Aon Netherlands’ latest data.

The policy funding ratio, based on the average funding ratio over the past 12 months, remained stable at 118 per cent in March, Aon’s Pension Thermometer shows.

Aon said equity markets maintained their momentum after February's record month and continued to rise. Developed market equities rose 3.4 per cent and emerging market equities rose 2.7 per cent. The fixed-income portfolio was up 2.5 per cent.

Furthermore, interest-rate-sensitive long-term bonds rose on falling interest rates. Riskier bonds are less sensitive to the fall in interest rates but benefited from the good sentiment. Corporate bonds rose 1.2 per cent, high yield 1.5 per cent and emerging markets hard currency 2.2 per cent. The portfolio's total return rose 3.2 per cent in March.

Regarding interest rates, Aon said, on balance, the risk-free interest rate fell by an average of 12 basis points over the first forty years in March. The Ultimate Forward Rate (UFR), which pension funds use to calculate the value of their future liabilities, came in at 1.4 per cent.

As a result of the fall in interest rates, the value of the liabilities increased by more than 2 per cent. As a result of the increase in assets of more than 3% in March, the funding ratio increased by approximately 1 per cent on balance.

In terms of the transition to the new system, Aon said that as the deadline is approaching for the submission of transition plans (1 January 2025) and implementation plans (1 July 2025), it is becoming clear to more pension funds where they want to go.

A summary of the transition plans that have already been published shows that, on average, 3 per cent of the funding ratio is spent on compensation and 4 per cent on the creation of a solidarity reserve. Compensation from the funding ratio is a sensitive issue for many pensioners, Aon said.

"We understand these sensitivities but want to emphasise that the transition to the new system must include something for all groups. At the end of the day, there must be a balanced transition. Compare it to dividing a cake. The outcome does not necessarily have to be that every group gets an equal piece of the pie, as long as each group is sufficiently satisfied with his or her share of the pie," Aon Netherlands director of wealth solutions, Frank Driessen said.

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