The pension liabilities of the Dutch pension fund PME, for those working in the tech and metal sectors, increased to €51.6bn in the third quarter (Q3) of 2024.

Publishing its interim update, the fund said its funding ratio fell from 114.8 per cent in June to 113.7 per cent at the end of September. This was caused by a fall in the interest rate from 2.5 per cent to 2.2 per cent, which increased pension liabilities in Q3.

Despite this, PME’s invested assets increased by €2.8bn in Q3 2024, from €55.9bn to €58.7bn, equivalent to a return of 4.8 per cent. The increase is mainly due to good performance on the stock market and high-yield securities.

Commenting, PME chair of the executive board, Eric Uijen, said: "Due to the lower interest rate, our pension obligations increased. PME has to set aside more money for current and future pensions. This means that, despite a good return and increased assets, the coverage ratio has fallen by more than one percentage point this quarter.

“And in the current system, it is precisely this coverage ratio, not the investment results achieved, that is the primary criterion for funds to determine whether or not to increase.
Due to the uncertainty about interest rate developments and the financial markets at the beginning of this year, PME decided in April not to make use of relaxed regulations in the run-up to the new system.

“Our conviction is that preventing a reduction in pensions for our participants is more important than an increase. This decision, in combination with an unstable world, makes me issue a profit warning. A possible increase in pensions will unfortunately be small this year.”

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