The coverage ratio at the end of january is 110,6%
What is the coverage ratio?
The coverage ratio of a pension fund indicates the ratio between the assets of the pension fund and the liabilities.
The current coverage ratio is 110,6%.
The policy coverage ratio is the average funding ratio over the past twelve months, which was 109.7% at the end of january 2020.
Why is the coverage ratio so important?
It is important for pension funds that they have sufficient assets to be able to pay the pensions both now and in the distant future. The higher the coverage ratio, the better the pension fund’s financial situation. With a coverage ratio of 100%, the fund has exactly the same amount of equity as assets. For every euro that must be paid, there is 1 euro in cash. Exactly enough seems nice, but it is safer to have a buffer (reserve). To compensate for setbacks, but also to be able to increase pensions with a supplement. De Nederlandsche Bank (DNB) supervises the coverage ratios of Dutch pension funds. DNB also imposes requirements on pension funds based on statutory provisions. For example, the coverage ratio of Pensioenfonds Detailhandel must be at least 105%. Should we come below this minimum, this is referred to as shortfall in coverage.
Pensioenfonds Detailhandel will continue with the measures that were laid down earlier in our recovery plan. Our website will keep you informed about our financial position.
The value of your pension
Because prices keep rising, your money is worth less every year. After all, the same amount of money will buy you less. This means that your Pensioenfonds Detailhandel pension also decreases in value. In order to prevent this, the pension fund tries to increase pensions every year.
Pensioenfonds Detailhandel pays the increase in your pension from the achieved return on investment. However, an increase is only possible if the pension fund has sufficient money. This means you are not automatically entitled to an increase. The pension fund does not reserve money for an increase and no premium is paid for it.