This increase is known as annual adjustments (indexation). The pension entitlements are the pensions accrued by employees or former employees who have not yet retired.
Partial indexation as of January 1, 2019
SPF aims to index your pension every year and to allow them 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. The financial position of the pension fund is expressed in the funding level. The funding level is the average ratio between a pension fund's assets and all current and future pension obligations over a period of twelve months. As at December 31, 2018, the policy funding level was 113.3%. According to the statutory regulations, a fund may partially index if its policy funding level is between 110% and 127%. That is why the Board has decided to partially index the payable pensions and accrued pension entitlements in 2019.
The pensions being paid now will be indexed in April, with a retrospective payment over January, February and March.
The payable pensions will be indexed as of January 1. Your next Uniform Pension Statement (UPS) will show you how this indexation affects your pension.
Calculation of partial indexation as of January 1, 2019
Former employees’ payable pensions and accrued pensions will be indexed by 0.41%. Price increases in 2018 amounted to 1.68%. Looking at the difference between the level of the policy funding level at which full indexation is possible (127%) and the level of the reference date of December 31, 2018 (113.3%), 24.3% of the price increase may be granted: 24.3% of 1.68% is equal to 0.41%.
Employees’ payable pensions and accrued pensions will be indexed by 0.36%. In 2018 the wage rise in Bergen op Zoom was 0% and in Limburg 3.0%. The average wage rise in 2018 amounted therefore to 1.5%. Looking at the difference between the level of the policy funding level at which full indexation is possible (127%) and the level of the reference date of December 31, 2018 (113.3%), 24.3% of the average wage rise may be granted: 24.3% of 1.50% is 0.36%.
No full indexation
As described above, no member’s pension commitment will be indexed fully. This concerns the pensions currently being paid, but also those that employees are accruing for the future. The decision not to apply full indexation, as has happened at SPF, reduces the purchasing power of our pensions and the pension entitlements. 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 are still accruing your pension and would like to know about the implications of the decision not to index your pension, log in to “My SPF pension” on SPF's website and click “Pension Risk.”
If you would like to see how your pension or pension accrual has been indexed in recent years, click here.
Might my pension be lowered in the future?
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, we may lower our members’ payable pensions and accrued pension entitlements. This measure will be rolled out on a “last resort” basis. However, based on the calculations in the recovery plan, SPF expects that the policy level will be well above the required level even after payable pensions and accrued pension entitlements have been indexed. This was one of the reasons why the Board decided to index pensions as of January 1, 2019.