Funding ratios as at March 2020 are known
17-04-2020
NN CDC Pensioenfonds’ funding ratios as at 31 March 2020 are known. The funding ratio is 94% and the policy funding ratio is 105%. Read this news item on the impact the coronavirus is having on the world economy and the pension fund's funding ratio.
The funding ratio indicates whether the fund’s financial position on a certain reference date is adequate enough to pay out pensions accrued now and in the future. The higher the funding ratio, the better the fund’s financial position. A funding ratio of 100% indicates that the fund’s financial position on the reference date is adequate enough to pay out pensions that have been built up in the fund. The funding ratio as at 31 March 2020 amounts to 94%. This is a decrease of 7% compared to February 2020.
The policy funding ratio is equal to the average of the funding ratios for the preceding twelve months. With effect from 2015, the policy funding ratio provides the fund with a benchmark for making policy decisions, such as determining the amount of headroom available for indexation and the adequacy of the fund’s reserves. By taking the average for the preceding twelve months, important decisions no longer hinge on the funding ratio prevailing on any given date. The policy funding ratio as at 31 March 2020 thus amounts to 105%. This is a decrease of 2% compared to February 2020.
Since 30 September 2015, NN CDC Pensioenfonds has been faced with a reserve deficit. This means that the pension fund’s policy funding ratio has fallen below the funding ratio required by law. Consequently, the pension fund has had to submit a recovery plan to DNB, followed by yearly updates. The most recent update was at 31 December 2019. As a consequence, the funding ratios of March 2020 do not impact the recovery plan. In June, the fund will publish the explanation of the recovery plan on the website.
The pension fund publishes its funding ratios on or around the 15th day of each month. The graph below shows the situation as at ultimo March 2020. Click here to see funding ratio developments in 2019 and 2020.
