How is TNO Pension Fund doing?
Kostijn van Gerven, Director of TNO Pension Fund, gives his vision of recent developments. What stood out and what does this mean for our pension fund?
Dear Reader,
The July Life & Pension traditionally focuses on the annual report, where we try to highlight the most important aspects of the previous year. And, of course, we’ll focus on the 2021 returns, on the coverage ratio as at 31 December 2021, and on indexation. But we’re also focusing on important issues such as developments in sustainable investment. We’ll use this limited number of pages to provide you with an overview of 2021.
But I don’t only want to reflect on the past year in this foreword because there are reasons enough in our current situation to also reflect on the present. The war in Ukraine is still ongoing. Prices of raw materials, especially oil and gas, are still high making inflation rates high in 2022. The stock markets are performing badly in 2022. And we are still facing the economic consequences of the COVID-19 pandemic. Major staff shortages are evident in many sectors. We can go on holiday again, but whether we can fly from Schiphol is uncertain.
Things appear to be going well with pension funds in the Netherlands. Increasing interest rates mean that funds’ coverage ratios are also increasing. We’ve not had such a high coverage ratio for a long time. But appearances can be deceptive. The situation is concerning. After all, high inflation also weakens pensions. We can certainly make up for some of this with indexation in early 2023 but, given the regulations, it will not be possible to compensate for the full extent of inflation. This, combined with falling stock markets, is concerning.
The Dutch House of Representatives has now approved a bill that makes it possible to grant additional indexation this year. We are investigating whether we can meet all the conditions needed to implement this. I expect we’ll be able to offer more clarity on this in September.
We are also busy preparing the transition to a new pension system and aim to have discussions on this with all stakeholders in the coming months. The law is currently not yet ready and there are still a lot of uncertainties. But in the second half of the year we hope to be able to discuss this with you.
It only remains for me to wish you a fantastic summer, despite all the uncertainties. Kostijn van Gerven directeur