Stichting Pensioenfonds ABP, Heerlen, Netherlands, is increasing pension benefits by 2.39%, the civil service pension fund said in a news release Thursday.
The benefit increase was possible because the Dutch government lowered the funding level threshold for increasing benefits, to 105% from 110%, as it prepares for a new pension system that goes into effect in 2026.
"The increase what we will pay to our participants this year is a direct result of the fact that the legislature has looked at the current agreements with a somewhat milder view — with the view of the future," said ABP CEO Harmen van Wijnen in a blog on the ABP website.
"In that new system, different, more flexible rules apply," he said.
Current participants "have had to wait a long time for an increase," Mr. Van Wijnen said, adding that the ABP board considered how the benefit increase would impact various groups of participants "and found that the decision is balanced," he said.
As of May 31, ABP's policy funding ratio was 110.1%. A further benefit increase in 2023 will be considered after assessing its financial position in October and the effect of the price increase, Mr. Van Wijnen said in his blog.
The benefit increase will go into effect July 1, when the new government funding ratio rule applies. Current beneficiaries will receive a retroactive increase as well.
A call to ABP was not immediately returned.
As of Dec. 31, ABP had €550 billion ($622.8 billion) in assets.