The indicative average funding ratio of Dutch pension funds increased to 120 per cent in June 2023, according to Aon’s latest Pension Thermometer.

It rose by 3 percentage points during the month after stabilising at 117 per cent in May.

Funding ratios rose due to an increase in interest rates on short maturities and positive equity returns.

However, this was partly offset by a fall in interest rates for longer maturities.

“Interest rates rose 10s of basis points on the short end of the curve, but fell for the longer maturities,” Aon noted.

According to the consultancy, fixed income portfolios returned an average of 0.9 per cent due to the changes in interest rates.

Meanwhile, developed market equities returned 4.5 per cent and emerging market equities returned 1.4 per cent.

The total average return of the indicative portfolio was 2.4 per cent in June, while the value of liabilities increased by around 0.7 per cent.

Commenting on the introduction of the Future Pensions Act, which came into force on 1 July, Aon Netherlands CEO wealth solutions, Frank Driessen, said: “It is wise to take sufficient time for the transition plan, to develop a risk matrix and plan B and to properly record considerations.

“The transition plan is an extremely important document for the transition and it is precisely this document that the parties should use to properly implement it together.

“This document is actually the calling card for the transition. Ultimately, the question of how the pot is divided is crucial in the transition to the new system.

“The abolition of the average premium also plays a role in this. We recommend drawing up and agreeing on a balance framework with each other, on which the transition will be assessed.

“In this way, there is objective decision-making and it is clear in advance which criteria are being looked at.”

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