Dutch pension fund ABP posted negative investment returns of -5.3 per cent, or -€25.8bn, in the third quarter of 2022, its quarterly update has revealed.

Over the first three quarters of the year, the return was -16.6 per cent, or -€91.5bn, with the fund stating that the Covid-19 pandemic and war in Ukraine were still having a negative impact on financial markets.

Despite this, ABP’s current funding ratio increased by 1.5 percentage points to 124.2 per cent in the third quarter.

As in the first half of the year, this increase was primarily attributed to the rise in interest rates.

Since the beginning of 2022, ABP’s current funding ratio has increased from 110.6 per cent to 124.2 per cent.

ABP therefore needs around €26bn less in cash to be able to pay all of its current and future pensions, making up for the loss on investments.

As the current funding ratio rose, the policy funding ratio also increaed, to 116.4 per cent, up from 111.6 per cent at the end of Q2 and from 102.8 per cent at the start of the year.

“The prices are rising enormously,” said ABP board chairman, Harmen van Wijnen.

“We all suffer from this and unfortunately we also see harrowing situations. It is therefore understandable that our participants are looking forward to a new increase in their pension.

“Given our financial position, it is expected that we will be able to increase pensions in 2023.

“The question now on our board table is which increase is justified. And that is more than a simple calculation.

“In the first place, we must take into account the interests of all groups of participants. If we start paying out more pension, we must also ensure that there is enough left in the joint pot for young people who are not yet ready for retirement.

“In addition, we live in a turbulent time, in which the financial markets are performing poorly and we are losing wealth.

“And finally, ABP must also remain financially healthy for the longer term in order to enable a smooth transition to the renewed pension system. We are now faced with the assessment of what is justified in the light of the actual price increase of 12 per cent.”

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