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Pensions will neither be increased nor cut Published: 25-03-2020

SPF will not cut pensions in 2020. However, unfortunately it will also be impossible to increase pensions to bring these into line with wage raises and inflation in what is referred to as ‘indexation’.

Unfortunately, no increase
SPF strives to increase your pension every year 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 ratio between the capital of a pension fund and all its current and future pension obligations. Partial or full indexation may be applied only when this ratio is at least 110%. Unfortunately, as the funding level of 105.7% at December 31, 2019, was below this minimum of 110%, it will not be possible to grant indexation. For this reason, the Board has decided not to index pensions in 2020.

Toeslagverlening.jpg (316 KB)As there will be no indexation, no pensions of any members will increase. This concerns the pensions currently being paid, but also those that employees are accruing for the future. The decision not to apply indexation that SPF has been compelled to take reduces the purchasing power of pensions. When, for example, average prices rise by 2% a year (inflation) and no indexation is applied during a ten-year period then your pension will be worth about 20% less after these ten years. Although you will not receive lower benefits, you will be able to buy less with the same amount of money.

For more information about indexing at SPF, click here.

If you are still accruing your pension and wish to find out more about the consequences of non-indexation for your pension then surf to the SPF website and log in to ‘My SPF pension’.

If you wish to see how your pension or pension accrual has been indexed in recent years then click here.

Fortunately, curtailments are not necessary either
The Board, as was the case last year, has drawn up a recovery plan for this year. SPF, on the basis of the calculations in the recovery plan, expects that the funding level can be restored to the required level without pension curtailments. This has resulted in the Board's decision not to reduce (curtail) pensions as from January 1, 2020. A number of factors including developments in the funding level determine whether pensions will need to be curtailed or can be indexed next year. These developments in the funding level are in turn partly dependent on movements on the financial markets. We shall notify all pension beneficiaries of any decision to curtail pensions at least three months in advance (increased from one month in advance as from January 1, 2020).

For more information about SPF's recovery plan, click here.

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