Pension funds face shortfalls due to low interest rates
Friday 10 September 2010
Civil services pension fund ABP, one of the biggest pension funds in the world, had a coverage ratio of 88% in August, well below the central bank's requirement of 105%.
In July, the ratio was 95%, meaning the fund had enough assets to cover 95% of its pension commitments.
The fund said the coverage ratio has shrunk because interest rates have hit a historic low.
Pay-outs
The health service pension fund, now known as Zorg en Welzijn, saw its coverage ratio plummet nine percentage points to 94%. The engineering sector fund ratio has gone down to 91%.
The funds and a number of others have launched a campaign to reassure members and pensioners that their pay-outs are not in danger.
'No other country in the world saves as much for pensions as we do,' the newspaper advert said. 'The only risk you run is that your pension could be a bit lower if the economy performs poorly or higher if the economy does well.'
If the ratios are not back at central bank-approved levels by next year, the funds could be forced to increase premiums or cut pensions, the Financieele Dagblad said earlier this week.
© DutchNews.nl
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Friday: Cold and sunny everywhere. Heavy frost at night. Similar Saturday but thaw possible Sunday
the Big Question - why are there not laws in place already to prevent this? obviously the pension funds need to be controlled and regulated. the fund managers, much like the rest of our 'leadership', are clearly incompetent and have no sense of responsibility for having the insight and risk managing skills that they should have at their salary level - otherwise this would not be happening.
By Bill | September 11, 2010 1:57 PM