Dutch pension funds are in favour of indexing from a funding ratio of 105 per cent and above, according to the Dutch Pension Federation.

With the Future Pensions Act expected to enter into force on 1 January 2023, a year later than originally agreed, legislation has been committed to ensure that indexation can be retroactively applied in the run-up to the new system as early as 2022. However, the Dutch Pension Federation believes that such legislation could be simpler as funds have to meet several conditions in order to increase pensions earlier.

The Dutch Pension Federation believes the rules for determining the maximum indexation should be more in line with the current system.

Dutch Pension Federation chairman, Ger Jaarsma, said: “Pension funds want to index if this works out well for workers and retirees, also in the long term. That has been their ambition for many years. This bill is intended to increase the chance of indexation in the shorter term, but it contains matters that make it unnecessarily difficult. In our response, we indicate how the legislation can be made more enforceable.”

With rising inflation, calls for the indexation of pensions is increasing. For many retirees, their pension has not kept pace with prices for a long time, and it is also important for working people that their pension accrual follows these price increases. As a result of the new measure, pension funds that want to rise pensions in line with inflation will be given more scope to do so.

The news comes as the federation also revealed that many Dutch pension funds are publishing higher funding ratios in their quarterly figures, mainly due to positive returns.

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