ABP funding ratio rises to 132.2% despite investment loss
Rising interest rates cut the pension fund's obligations by more than its investments lost. Any pension increase will be announced in January, not November, and no amount has been decided.
Dutch pension fund ABP’s funding ratio rose to 132.2% at the end of September, from 126.9% at the end of June, the fund said in its third-quarter report on 29 October. The rise came even though its investments lost money.
ABP’s investments returned minus 4.3% in the quarter, a loss of €24.3 billion, which brought its assets down to €543 billion. But the value of its pension obligations moves with interest rates, and a sharp rise in rates cut those obligations by relatively more: from €447 billion to €411 billion, a fall of €36 billion. That pushed the funding ratio up.
A slower expected rise in life expectancy, based on new projections from the Dutch Actuarial Association, also helped. ABP says it had a positive effect of just over 1.5% on the ratio. The policy funding ratio, the average of the past 12 months, rose from 122.8% to 125.2%.
A higher funding ratio is not an investment gain, and it does not mean pensions go up automatically. It compares what the fund owns with what it expects to pay out.
Pension increase news moves to January
ABP usually announces any pension increase in November, together with next year’s premium. The premium will still be announced in November, but according to the quarterly report, news on any increase will follow in January, because ABP plans to switch to the new pension system on 1 January 2027.
At that switch, ABP will divide its total pension assets. It will calculate how much each pension is worth and how much goes into a shared buffer. How much it can divide depends mainly on the funding ratio on 31 December 2026: the higher the ratio, the more there is to divide. What each member receives does not follow one-to-one from the funding ratio, ABP says, but also depends on personal circumstances. No amount has been decided.
ABP will publish the 31 December funding ratio at the end of January in its next quarterly report. After that, it plans to change the format of its quarterly reporting.
About ABP
ABP is the pension fund for around 3 million people in government, education and other public jobs.
