Personal note
Dear reader,
How are the financial markets doing? Kostijn van Gerven, director of TNO Pension Fund, gives his vision of the developments over the past months and the expectations for 2019.
‘Did you follow the developments on the financial markets in the final months of last year? Until the end of September it was much as usual. The stock markets went up a bit. And the stock markets went down a bit. As you would expect. Then, at the end of September, there was a huge drop in prices. Within the space of one month, the stock markets lost more than 11% of their value without there being a clear reason for this. But it wasn’t over yet. The month of December was even worse. The stock markets fell by more than 17%. Again, there was no clear reason for this development.
Perhaps the fall was due to the impending trade war between America and China. Perhaps the markets were preparing for a no-deal Brexit. Perhaps the less rosy profit expectations of companies were the cause of the price falls. In fact, the policy coverage ratio (i.e. the average coverage ratio of the last 12 months) of our pension fund at the end of 2018 was the same as at the end of 2017, i.e. 114.0%.
A policy coverage ratio of 114% means that the fund can award partial indexation. This means that your pension does not grow at a maximum rate together with the price inflation of 1.68% (derived from the consumer price index), but at the legal maximum of 0.55%.’
What are the expectations for 2019?
‘The markets seem to have calmed down in the meantime. The stock markets have recovered somewhat. But the interest rate is still very low. 2019 is expected to be a difficult year with low interest rates and low returns. We will have to wait and see what will come of these expectations. I can't promise you anything. The fund will do everything in its power to respond as effectively as possible to developments. I can you promise that.’
Kind regards,
Kostijn
Kostijn van Gerven
director