In April, the pension funds became just as hot, when Donald Trump announced his trade rates for other countries with a lot of bombing. Investors responded little positively and the rates fell, which also had an impact on pension funds. According to Aegon Asset Management, the funding degrees were in a ‘free fall’ and together lost Dutch funds, an average of 7 percentage points of their coverage ratio.
Higher coverage degrees
A few months later the world looks very different. The stock exchange has been added again and the interest rates rise, which means that pension funds are more spacious in their jacket. “Because we have to put less money aside for the current and future pensions and the positive returns on our return portfolio (the portfolio with more risky investments such as shares, ed.), Our financial health improved again,” said Eric Uijen from PME from PME from PME.
That fund saw the coverage ratio rise in the past six months by more than 7 percentage points, to 120.1 percent. Other large funds such as ABP (now 117.1 percent), BPF Bouw (133.2 percent), PMT (114.8 percent) and PFZW (117.5 percent) also saw their coverage ratio.
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Especially for the latter fund, which arranges the pensions for care staff, the increased coverage ratio is very welcome. PFZW is planning to switch to the new pension system as the first major fund on 1 January 2026. A high coverage ratio is then welcome: the more money there is in the house, the more it can be ‘distributed’ at the time of the transition. “We are still on course for half a year before that intended transfer date,” says chairman of the board Joanne Kellermann of PFZW.
Returns
The funds have not risen that the funding degrees have risen to returns on the stock exchange. They are negative this year for the time being. For example, ABP has achieved a return of -2.7 percent to date, the investments of PME have fallen by 3.8 percent in value, PFZW deteriorated 4.4 percent, earlier achieved a loss of 5.4 percent and BPF Bouw saw the investments fall by 3.9 percent.
Funds also suffer from the US dollar, which fell in value compared to the euro. As a result, American investments are also worth less for European investors. Funds, however, cover a part of that currency risk, so that the fall in value does not fully work.
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The negative returns are made up for by the interest, which rose in the past quarter. With a higher interest rate, funds have to set aside less money for current and future pension benefits, and then the coverage rate increases. That is why funds are on paper better than six months ago, while the invested power decreased in the same period.