NN CDC Pensioenfonds tries to increase pensions of current and former NN employees and pensioners each year, in line with the price index. An increase will not be granted for 2019. The omitted increase may be granted in a future year.
Indexation of pensions is important, as it ensures that a pension’s spending power is maintained. Once a year, NN CDC Pensioenfonds decides whether or not indexation is granted in line with the price index for October to October.
No indexation for 2019
By law, indexation is only allowed if a pension fund’s policy funding ratio is higher than 110%. NN CDC Pensioenfonds takes its policy funding ratio on 30 September as a reference point. The policy funding ratio is equal to the average funding ratio for the preceding 12 months. Taking the average ratio ensures that an important decision such as indexation does not hinge on the funding ratio at one point in time.
The policy funding ratio on 30 September 2019 was 110.5%. However, the board of NN CDC Pensioenfonds has decided not to grant an indexation for 2019, primarily given the recent development of the financial position of the fund. The fact that NN CDC Pensioenfonds has a recovery plan in place is irrelevant in this respect.
Omitted increase may be granted in the future
If indexation had been granted in full, NN CDC Pensioenfonds would have increased pensions by 1.73% in 2019. The fund calculates this percentage based on the overall consumer price index for households in the Netherlands, as published by Statistics Netherlands (CBS) for the months from October 2018 to October 2019.
The omitted annual increase is recorded in the pension fund's accounts. If the pension fund’s policy funding ratio is high enough at a certain point in future time, the fund will be able to increase pensions to make up for the omitted indexation. This is currently not the case however.
Further information
For more information about NN CDC Pensioenfonds’ indexation policy, click here.
If you were employed by NN before 1 January 2014, please click here to read about the indexation policy of Pensioenfonds ING.
Stay informed
You can read all about the pension fund's financial position on our website and in our quarterly reports and the newsletter ‘Special’. In February, you will receive a letter about the decision not to increase pensions for 2019.
