After nine months of an upward curve, our financial situation deteriorated in the final quarter of 2018. This was due to the fact that the return on shares plummeted and the rate of interest fell.
“It was a significant setback,” remarked Ruud Degenhardt, Chairman of Pensioenfonds PGB, in the Quarterly Report published today.
Taking an average over the whole of 2018, PGB’s coverage ratio still rose: the policy coverage ratio rose from 106.1% at the end of 2017 to 108.7% by 31 December 2018. However, the current UFR coverage ratio fell to 103.8% by 31 December 2018.
As a result, the prospect of any indexation has unfortunately declined, according to Ruud Degenhardt. “But luckily the chance of having to apply a reduction is still very low. Despite the losses in our investments over 2018, we are currently in a sufficiently good position that, at present, we do not have to consider reducing the pensions in 2020.”
Policy coverage ratio 31 December 2018: 108.7%
The financial situation over the past months is illustrated by the policy coverage ratio, which shows a twelve-month average. This coverage ratio fell in the fourth quarter from 109.3% to 108.7% by 31 December 2018. Here, you can read more about the development of the policy coverage ratio.
Current UFR coverage ratio as at 31 December 2018: 103.8%
The current coverage ratio fell in the fourth quarter from 111.5% to 103.8% . This involved the so-called UFR coverage ratio, which is a snapshot taken at the end of the month.
Return on investments in 2018: -2.3% (-4.2% in the fourth quarter)
The return on investments was negative in the fourth quarter (-4.2%). However, the investments which hedged the interest rate risk (Matching) provided a return of +4.5% in 2018. The return on the investments intended to achieve an extra return (Return) was -7.3% in 2018. Consequently, the total return in 2018 was -2.3% when compared to the end of 2017.
Return on investments in the Defined Contribution Schemes in 2018
The returns for each age group in our defined contribution schemes fell last year. In 2018, the return varied between -1.9% (for participants aged 58-68 years) and -5.5% (for participants under 38 years).