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?
As I write this foreword, the world is on fire: for the first time since 1945, there is a major war in Europe. This makes it difficult to find the right tone for this foreword. It is leading to great uncertainty. First of all, of course, for Ukraine’s residents. The huge streams of refugees and loss of life are so saddening. I can only hope that the violence ends quickly.
It is also leading to economic uncertainties: Europe’s dependence on Russian gas and high energy prices. High inflation. Strict sanctions against Russia. Prices falling on the stock exchanges. 2022 will be an uncertain year.
And we’ve only just finished a year of records: 2021 was actually an exceptionally good year for the stock market. In the second half of the year, the AEX broke record after record. Interest rates remained low although they increased slightly compared with 2020. This led to the fund achieving returns of 8.6% in 2021. And with a coverage ratio (12 month-average coverage ratio) of 114.8%, the fund was able to index pensions again for the first time in a long time. Based on current legislation, indexation of 1.09% was possible. As inflation was 3.3% on average over 2021, we were unable to avoid a reduction in our pension beneficiaries’ purchasing power.
Partly because of the war in Ukraine, it seems likely that inflation will remain high in 2022. That’s clear from the oil and gas prices. However, it is difficult to predict the consequences for stock market and interest rate developments, and their effect on our Pension Fund’s financial situation.
We have included a report on our website about the impact of the Russian invasion on the fund’s investments. When things change, I will keep you informed via reports on the website.
Kostijn van Gerven Director