Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. Print
February 03, 2003 12:00 AM

GOVERNMENT MANDATE: ABP mulls action to boost its funding ratio

Contribution hike, benefit cuts could help get fund back in line

Benjamin Seeder
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    HEERLEN, Netherlands - Stichting Pensioenfonds ABP, the Netherlands' biggest pension scheme, is talking with government and trade unions about the possibility of boosting contributions and cutting benefits.

    The actions may be necessary because the plan's funding ratio fell below the strict new minimum enforced by the Dutch regulator Pensioen & Verzekeringskamer (PVK), Apeldoorn. It was announced in the quarterly report in January.

    ABP officials said the fund's assets in 2002 fell to e135 billion ($144 billion) from e 147 billion. The funding ratio declined to 103% from 122%.

    The revelation added fuel to the debate over the PVK's new rules, which have been under assault from the Dutch pension industry since they were introduced in October. The rules require pension schemes to maintain funding ratios of more than 105%, plus an additional buffer based on the composition of the investment portfolio. Schemes that fall below the minimum levels must submit reports to the PVK within three months that show how the plan will return to fully funded status in a maximum of one year.

    Harmful to economy

    The Dutch Pension Funds Association, The Hague, in December published research suggesting the rules not only did little to provide additional capital adequacy protection but were harmful to the Dutch economy and harmful to scheme members by encouraging companies to close occupational plans.

    The association commissioned Guus Boender, chairman of actuarial consultancy Ortec, Rotterdam, to examine the effects of the PVK's rules.

    His report found that in a worse-case scenario between 2004 and 2007, 1.2% would be added to the country's inflation rate, corporate profits would decline by 16% and up to 138,000 Dutch jobs would be lost as a result of the strict funding rules.

    "The 105% funding ratio will lead to a worsening of the macroeconomic situation between 2004 and 2007, because premiums will have to rise (to cover the funding)," Mr. Boender said.

    His report revealed private labor costs would increase by 5.4%, and public labor costs would rise by 7.8%.

    The requirement that funds return to fully funded status within 12 months earned special criticism from the pension industry.

    Supports change

    Although ABP officials declined to discuss the new rules, spokesman Michel Meijs said ABP "supports the discussions between the PVK and the Pension Funds Association," indicating it supports some form of change.

    He said the scheme commissioned a new asset-liability study as a result of the new developments, which is due in April. He said the scheme's board of governors will present a plan to the regulator on how to return to the minimum funding level by summer 2003 after talking to participants about raising contributions or cutting benefits or both. Participant benefits are now increased annually to keep pace with inflation.

    The scheme already raised the employee contribution level in December 2002, from 10.5% to 12.9%, Mr. Meijs said. This was the maximum increase allowable under the plan's articles of association.

    PVK spokesman Loek van Daalen said the agency rejected the criticism of the new rules and suggested the research commissioned by the Dutch Pension Funds Association was flawed and based on unrealistic assumptions.

    Like all Dutch pension plans, ABP's portfolio has been decimated by falling stock markets over the past few years. Last year, the PVK revealed that about a third of all Dutch pension schemes had fallen below the minimum funding ratio requirement.

    Recommended for You
    Read the print edition of P&I
    Read the print edition of P&I
    How low is low? Projections say it's not low enough
    How low is low? Projections say it's not low enough
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    FINRA honors Wharton's Olivia Mitchell with Ketchum Prize
    Alternatives: Investing Across the Spectrum
    Sponsored Content: Alternatives: Investing Across the Spectrum

    Reader Poll

    May 9, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Are Factors a Thing of the Past?
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    Out of the Shadows: The Revolution in Shadow Accounting
    The pivotal role of fixed income markets in the ESG revolution
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    May 9, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference