Retired construction workers can fly the flag this week. From 1 January, they will receive slightly more than 14.5 percent extra pension paid into their bank account. A record index. The retired employees of the swimming pool sector will look at it with envy. Their Pension Fund Recreation announced this month that it sees no room for any increase. With today’s high inflation, this means a sharp decline in income in 2023. “We do not think it is responsible,” the board writes on the website. The funding ratio is not generous and the board wants to maintain an extra buffer so that it does not have to immediately reduce pensions if things go wrong.
Many pension funds will announce this month whether and, if so, how much pensions can increase in 2023. This applies to current benefits, but also to employees’ entitlements to future pensions. The differences are sometimes very large. The pension fund BpfBouw (785,000 participants) is in the lead, followed by PNO Media (for the creative and digital sector), with an announced increase of 13.58 percent. Large pension funds, such as the PMT metal pension fund and Pensioenfonds Zorg en Welzijn, are more moderate and are increasing pensions from 1 January by 4.2 and 6 percent respectively. The largest pension fund ABP (government and education) will announce its increase on Thursday.
Read alsoFirst major fund increases pensions, after 14 years of stagnation
The fact that many Dutch people see their current or future pension increase was virtually unprecedented until this year. It was not until the summer of 2022 that a number of pension funds were happy to have room for an increase. Rising interest rates put them in a better financial position and, moreover, the rules were (temporarily) relaxed, so that they need to hold slightly fewer reserves. In the summer, the pension administrators mostly opted for the same line, with a maximum increase of 1 to 3 percent. Now the differences are much greater.
Positive real estate
The enormous inflation ensures that people with a pension benefit can do less with their money every month. The better the pension fund is in, the more options there are to ensure that people’s household budgets remain in order. This certainly applies to the pension fund for the construction industry, which has a coverage ratio of around 140 percent, well above the average in the pension world. “Unprecedentedly high”, says David van As, director of the pension fund, although he immediately adds that the construction pension fund has also performed very well in previous years. But of course the positive developments in real estate, in which the fund invests in various ways, make an extra contribution to this.
Not every construction worker benefits from the unprecedentedly high pension indexation. Construction is now running at full speed, but after the credit crisis of 2008, construction collapsed completely and many workers were laid off. This also had consequences for the number of working participants in the pension fund. That group of premium payers has now increased again, says Van As. “But you also see that many people work as a self-employed person in construction right now, because they can earn more money that way. They now find it far too expensive to pay for a pension. Only later do they find out that they really do not have a pension. Politicians rightly demand attention for this.”