Almost a quarter (23 per cent) of Dutch pension funds will increase pensions in full or in part (56 per cent) in 2025, research from the Dutch Federation of Pension Funds has found.

The research found that the increase will be slightly less than 2 per cent on average and around 7 per cent of the funds would not be able to increase pensions.

The federation said it was not known whether pensions for around 12 per cent of the pension funds would be increased in 2025.

Commenting on this, Dutch Federation of Pension Funds chairman, Ger Jaarsma, said: “After a long period of stagnation, many pension funds have been able to increase pensions in recent years.

“Most pension funds will also be able to increase pensions in full or in part in 2025. This is certainly good news for workers and pensioners who are affiliated with these pension funds.”

He added that at the same time, nuance was appropriate, as quite a few funds would not be able to increase pensions, or only to a very limited extent.

“That is a setback for workers and pensioners who were hoping for more,” he said.

Jaarsma argued that pension funds strive to offer a valuable pension for their employees and pensioners and when it is financially possible, they will increase pensions.

However, he noted that this did not always work and offered the reason for changing economic circumstances such as falling interest rates as an example.

“You can see from this that pension funds always make a careful assessment when it comes to increasing. In doing so, they also explicitly look at the long term,” he said.

“Sometimes, the financial situation of a fund unfortunately does not allow it to increase pensions.

“And because pension funds want to switch to the renewed pension system in a good and careful manner, that is also included in the decision-making process."

Furthermore, the Dutch Federation of Pension Funds said the most important factor in the 'old' pension system was the level of the coverage ratio, as when the coverage ratio is favourable a pension fund has the possibility to increase pensions.

The coverage ratio is the ratio between the money that a pension fund has 'in cash' and the obligations it has towards affiliated workers and pensioners. This is influenced by many factors, including the developments of the investments and the interest, which determines how the obligations must be valued.

It also said other matters were considered including the increase they have given in recent years, the development of prices with pension funds using different inflation measurement points, and some funds using a specific date.

Meanwhile, other funds look at a longer period. The membership composition of a pension fund is also taken into account.

Pension funds can choose to use relaxed rules in the run-up to the transition to the new pension scheme, in which case there would be more room to increase pensions, even with a slightly lower coverage ratio.

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