The indicative average current funding ratio of Dutch pension funds rose from 117 per cent to 120 per cent in February, according to research by Aon.

Despite global financial concerns and falling investment returns, the rise in interest rates resulted in an increase in pension schemes’ financial positions.

Aon noted that although equities and fixed income assets decreased in February, rising interest rates caused liabilities to fall.

The indicative policy funding ratio, which is the average funding ratio over the past 12 months, remained the same in February at 121 per cent.

Aon stated that, with this average, pension cuts seemed to be “out of the question” for almost all pension funds.

In fact, the allocation of indexations had resulted in the current funding ratio falling below the policy funding ratio, with many pension funds increasing members’ pensions at the start of the year.

While equities rose at the beginning at the month, they fell later in the month, resulting in an equity return of -1.3 per cent, with developed market equities down 0.8 per cent and emerging market equities down 4.2 per cent.

Rising interest rates had a negative effect on listed real estate, according to Aon, which fell by more than 2 per cent, while fixed income assets fell by 5.8 per cent due to the negative return on interest-sensitive government bonds (-4.5 per cent), corporate bonds (-1. 4 per cent) and high yield (-1.6 per cent).

The total return of the portfolio was -3.1 per cent in February.

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