Several large Dutch pension funds, including civil service scheme ABP an healthcare fund PFZW, have increased pension for the first time since 2008. The pension funds can finally index again thanks to a steep rise in funding ratios this year and a relaxation of solvency rules.

ABP will increase pensions by 2.39% as of 1 July, and will pay an additional 1.2% to pensioners to compensate for missed indexation during the first six months of this year.

The increase has been made possible by two factors: even though €500bn ABP has lost close to €50bn in assets since the start of the year, the fund’s funding ratio has steadily risen to top 125% by the end of May thanks to a rapid rise in interest rates.

In addition to this, the Dutch government recently approved a measure allowing pension funds to index pensions faster in the run-up to the upcoming pension transition. The minimum funding ratio threshold allowing for indexation was lowered from 110% to 105%. This made a big difference for ABP, which had a so-called policy funding ratio (the average funding ratio over the past 12 months) of 110.1% by the end of May.

Pension funds PME and PWRI are also able to increase pensions by 1.29% and 1.87%, respectively, as of 1 July, thanks to the relaxation of the solvency rules.

PFZW, for its part, announced it will increase pensions by 2.7%, but only from October as the fund “wants to make sure the pension increase is well prepared and will be implemented without mistakes”, according to a spokesperson for the fund.

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