In the next few weeks, the board will look at whether we can increase pensions again next year. In the past two years, we increased pensions by 3 and 7%. We also want to increase them in 2024, but that is only possible if it works out well for everyone. The board therefore carefully weighs the interests of all our participants and maps out the effect of increasing pensions on our financial situation. Naturally, they observe great care and consult with, among others, the accountability body. This article explains what the board takes into account (among other things) in this decision.
How much we want to increase is what we refer to as our target: we want to ensure our pensions retain their value. Until 2023, we as a pension fund had a fixed target. This means our target was not dependent on how much prices rise (inflation). So: no matter how high inflation was, we increased by a maximum of 3%. Because there was hardly any inflation for a long time, this percentage seemed high enough. Last year, inflation was unexpectedly much higher than our target. The board therefore took a critical look at the fixed target and decided to abandon it. It chose to link the supplemental target to inflation. As a result, we increased pensions by 7% in 2023, instead of the previous maximum of 3%. Our participants still perceive life as expensive. That is why the board will be looking at the target for 2024 in the coming weeks.
Statistics Netherlands (CBS) publishes the inflation figures every month. It always determined these figures by comparing prices at the end of a particular month with the same month a year earlier. This year, CBS adjusted the measuring method, because the way it used energy prices gave an inflation figure that was too high. This makes it seem as if there is no inflation now, while prices did rise last year. In September (the month our board normally looks at), inflation even appears negative. This is because the prices of September 2023 were compared with September 2022, when the measuring method had not yet been adjusted.
So you see: the moment of measurement is very important (in July, for example, inflation was as high as 3%). Inflation will remain unpredictable in the coming years, so we want to refine our calculation method, enabling us to calculate inflation more fairly and being less dependent on one measuring moment. That is why we are now examining whether we can use an average inflation over the past 12 months instead of a snapshot. Because our target still is a pension with stable value, linked to inflation.
Our financial situation
Our financial situation has improved this year thanks to rising interest rates. However, our investments are under pressure, for example, due to the ongoing war in Ukraine and the current situation in the Middle East. This means we don’t know if we can maintain the improvement next year. We must also take this into account when determining how much we can increase pensions, if at all.
Want to know about pension increases?
Read this column by our chairman of the board, Jochem Dijckmeester. Alternatively, visit the page ‘financial situation’. Here, you will find our financial reports and information about, for example, increases and decreases, actuarial interest and the coverage ratio.