The average funding ratio of Dutch funds rose to 124 per cent in May, according to Aon Netherlands, despite a decrease in the equity and fixed-income portfolio.

The rise in the funding ratio was due to a further rise in interest rates for May, Aon said. The latest figures from its Pension Thermometer also show that the policy funding ratio, based on the average funding ratio over the past 12 months, rose to 114 per cent in May.

The increased funding ratios are bringing indexation into question for many funds. Aon Wealth CEO, Frank Driessen, said: “After many years of gloom in the pension world and the current high inflation, it is tempting to be able to bring a positive message. Nevertheless, we advise funds to look at this carefully."

Interest rates maintained their upward trend in May. Over the first 40 years, the yield curve rose by about 19 basis points. Due to the higher interest rates, liabilities have fallen. On balance, liabilities decreased by approximately 4 per cent.

However, the decline in global equity markets in April continued in May, marking the longest weekly losing streak since the 2008 global financial crisis, with rising inflation and rising interest rates, coronavirus lockdowns in China and the Russian invasion of Ukraine weighing on sentiment.

By the end of the month, stocks recovered somewhat but 'developed and emerging markets eventually fell about 1 per cent. Rising interest rates and a weakening outlook caused real estate to fall by 3 per cent. Only raw materials showed a positive return of more than 3 per cent.

The rising interest rates this month again led to negative yields on corporate bonds (-1.2 per cent), high yield (-0.5 per cent) and mortgages (-2.3 per cent) as mortgage rates rise slightly. Long-term interest rates rose, causing the entire fixed-income portfolio to fall by 4.9 per cent. Overall, the portfolio achieved a negative return of 3.2 per cent.

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