How is TNO Pension Fund doing?
Kostijn van Gerven, TNO Pension Fund’s Director, gives his vision of the developments over the past months. What stood out and what does this mean for our pension fund?
Dear reader,
I write this foreword with mixed feelings. Mixed feelings about different points. First, the following aspect is important: the Annual Report Special in this Life & Pension focuses on the 2019 annual report. A year with an attractive return on investment. Despite that good return, we could not index pensions. This is frustrating but the low interest rate meant our policy coverage ratio (<110%) was too low to be allowed to index.
Coronavirus crisis My second point concerns the current coronavirus crisis. The annual report describes the period before the pandemic. In the meantime, the world has changed. Interest rates are even lower and the stock markets fell sharply in March. Even though the stock markets have recovered somewhat, the situation on the markets is volatile. By calculating the various scenarios, the fund’s board is trying to be as prepared as possible for all possible market developments. Every month we post a message on the website about the fund’s current situation. I cordially invite you to follow developments through the website.
Future pension system My third point concerns the future of the pension system. As you might have read in the newspapers and in the news on our website, a draft agreement for a new system is on the table. At the time of writing this foreword, the parties had not yet reached consensus. Although the new system will make pensions more individual, it will retain characteristics of solidarity. Under the new system, the coverage ratio would no longer be important. We will become less dependent on interest rates in the short term. Having a good investment return and not being able to index – as I described in my first point – would then no longer be an issue.
But there are still many points that need to be fleshed out. What happens to the accrued rights? How do we absorb stock market shocks? It will be necessary to detail the agreement and amend the Pensions Act over the coming years. I will keep you posted on this as well.
Kind regards, Kostijn
Kostijn van Gerven
Director