The Board of SPF recently decided to partially increase pensions in 2022. We refer to this increase as ‘indexation.’
SPF strives for the best possible pension. We aim to increase your pension every year and allow it to grow in line with inflation or wage rises. The financial position of the fund and the statutory regulations that apply to indexation play a major role during the annual decision-making process in this regard. Our financial position is expressed in the policy funding level. The policy funding level is the average funding level over the past twelve months. The funding level is the ratio between the capital of a pension fund and all its current and future pension obligations. As at December 31, 2021, the policy funding level was 111.9%. According to the current statutory regulations, a fund may partially index if its policy funding level is between 110% and 126%. The Board has therefore decided to grant a partial increase in 2022.
The pensions being paid now will be indexed in March, with a retrospective payment over January and February.
The accrued pensions will be indexed as of January 1. Your next Uniform Pension Statement (UPS) will show you how this indexation affects your pension.
Former employees’ payable pensions and accrued pensions will be indexed by 0.46%. Inflation in 2021 was 3.28%. Looking at the difference between the level of the policy funding level at which full indexation is possible (126%) and the level on the reference date of December 31, 2021 (111.9%), 14.1% of the price increase may be granted: 14.1% of 3.28% is equal to 0.46%.
Employees’ payable pensions and accrued pensions will be indexed by 0.55%. In 2021. The wage increase in Bergen op Zoom was 3.79% in 2021 (1.75% increase in 2020 and another 2.00% increase in 2021 that had not been calculated into the basis for indexation at the start of 2021) and 4.04% in South Limburg.
The average wage rise in 2021 therefore amounted to 3.91%. Looking at the difference between the level of the policy funding level at which full indexation is possible (126%) and the level on the reference date of December 31, 2021 (111.9%), 14.1% of the average wage rise may be granted: 14.1% of 3.91% is equal to 0.55%.
As described above, no member’s pension will be indexed fully. This concerns the pensions currently being paid, as well as those that employees are accruing for the future. The decision not to fully index reduces the purchasing power of pensions. If, for example, average prices rise by 2% a year (inflation) and no indexing is applied for ten years, your pension will be worth about 20% less after this ten-year period. Although you will not receive lower benefits, you will be able to buy less with the same amount of money.
If you would like to know more about increases (indexation) at SPF, click here.
If you would like to see how your pension has been indexed in recent years, click here.
A motion related to this topic was recently passed in the Dutch Lower House and added to the draft legislation on the new pension system. This motion – the ‘Van Dijk motion’ – should make it possible for pension funds to index pensions even at a lower policy funding level (from 105%). The Wet Toekomst Pensioenen (Future of Pensions Act) is expected to be debated and adopted in the course of 2022.
This new legislation is expected to apply at the earliest in the second half of 2022. We will regularly inform you of developments through this website, press releases, and other media.
If developments on the financial markets take a turn for the worse, this may have a negative impact on SPF’s financial position. If SPF’s financial position is too weak, SPF must lower pensions. However, this measure will be rolled out on a “last resort” basis. SPF, on the basis of the calculations in the recovery plan, expects that the funding level can be restored to the required level even after indexing pensions. This was one of the reasons why the Board decided not to reduce pensions and to index them as of January 1, 2022.