Dutch pension fund PME Pensioenfonds has revealed that its current funding ratio increased by 1.6 percentage points in December 2022.

It rose from 108.8 per cent per cent at the end of November to 110.4 per cent at the end of December.

The increase follows a 8 percentage point decrease in November.

The funding ratio is the measure of the fund’s financial health, showing the ratio between PME’s assets and liabilities.

Alongside the increase in the current funding ratio, PME’s policy funding ratio also rose slightly, from 111.5 per cent at the end of November to 111.7 per cent at the end of December.

The policy funding ratio is the average funding ratio over the past 12 months and determines whether PME is able to increase pensions at the end of the year.

Currently, as the policy funding ratio is above 105 per cent, the fund can choose to increase pensions.

“We are obliged to have extra money to cover financial setbacks,” noted PME.

“This is an additional buffer. We call this buffer the required own funds. This required additional buffer is linked to the required funding ratio.

“The required funding ratio differs per pension fund and is determined by law. We have sufficient buffers with a funding ratio of 118 per cent.

“What if the policy funding ratio is lower than the required funding ratio of 118 per cent? Then we must submit a recovery plan to De Nederlandsche Bank.

“In this recovery plan, we explain how we will get the funding ratio back to 118 per cent within 10 years.”

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