Besides the funding level, a pension fund must calculate the “policy funding level,” being the average of the last twelve months of monthly funding levels. The policy funding level can be used to determine whether a pension fund needs to curtail accrued pensions and pensions that have commenced payment.
The policy funding level can also be used to determine whether a pension fund is in a deficit situation, in which case the pension fund would be required to submit a recovery plan to the Dutch central bank, DNB (De Nederlandsche Bank). The recovery plan outlines how a pension fund aims to achieve a higher funding level in the coming years. The policy funding level plays a decisive role in the fund’s decision on whether to index.
Mid 2022 the Board decided to use the additional indexation possibilities following the AMvB (‘Van Dijk Motion’) and to award an additional indexation from July 1, 2022 of 2.81% for the pensions of pensioners in payment and accrued pensions of deferred members (sleepers), and a 3.34% increase of the accrued pensions of active members (employees). Later that year, the Board decided to award indexation of 4.53% for active members and 10.73% for non-active members as of January 1, 2023.
In 2022 based on the indexation policy, the Board decided to award indexation to members and pensioners as well as deferred members in line with the fund’s financial situation as at end 2022. For members, this means indexation of 7.89% and indexation of 10.73% for deferred members and pensioners.
More information about indexation is available on SPF’s website.