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,
As always, the first pension newsletter of the year includes a reflection on the previous year. But what on earth should I write about this? The war in Ukraine is the first thing that comes to mind together with the associated energy price increases. Food is becoming more expensive. High inflation. Stock market losses. Rising interest rates. Insecurity.
But those interest rate rises also resulted in a sharp increase in the Pension Fund’s coverage ratio (the ratio between the fund’s investments and all pension payments). This impacts how we make our calculations within the current pension system because we have to be able to pay all future pension payments from this interest. So when interest rates are higher, you can pay all future pension payments from this higher interest income, which means you need less in cash now. The consequence is an increasing coverage ratio.
In itself, this is great because the high coverage ratio allowed us to grant indexation of 9.93% over 2022. You can read all about this in a separate newsletter. But it feels strange that we can index by a considerable amount when the economy is faltering. And in previous years, when the economy was doing very well, we were not or were hardly able to apply indexation.
Perhaps this is also one of the key reasons why we are moving to a new pension system in the Netherlands. The new system uses different calculation methods, which creates a more direct link between the state of the economy and the options to increase pensions.
We will be able to provide more clarity on how your pension fund will implement the new system during the course of 2023 and are working hard on this in consultation with all stakeholders.
In any event, 2023 will bring huge changes for me as I’m retiring! This is the last time I’ll be writing this foreword as I have stepped down from my position as Director of the fund on 1 April. The Board has now appointed Suzanne van Kooten as my successor.
I’ve been Director for almost ten years. Ten years in which so much happened. It’s hard to summarize in a few sentences, but the main themes concerned the further professionalization of the pension fund management and the considerably higher requirements placed on funds. And that’s only right. After all, it’s about income for later. It’s our job to ensure that this is well-arranged for over 17,500 families. I’m lucky to have had a team of specialists alongside me in my ten years as Director. I’d first like to thank my staff for the great way they carried out their work over all these years. And I’d also like to thank all of you. For all the contacts we had over those ten years. For your trust in the fund. For the fact that I was able to be Director for ten years.
I’m looking forward to the next chapter in my life and reflect on a wonderful time at the fund.
Kostijn van Gerven Director