The funding level and the policy funding level are published around the 10th working day of each month.
Funding level on August 31, 2022: 128.9%
Policy funding level on August 31, 2022: 120.8%
The policy funding level is used to make decisions on indexation. The policy funding level is the average of the last twelve months of funding levels.
Click here for more information about the monthly development of the funding level.
Funding level evolution
The funding level of the pension fund rose by 5.8% to 128.9% in August. During August, equity markets achieved a negative return and interest rates also increased. Due to the fact that the pension fund has not hedged part of the interest rate risk, the sharply increased interest rate had a strong positive effect on the funding level.
Jerome Powell, the Chair of the US Federal Reserve (the FED), had an unexpectedly negative message at the end of the month. Markets were particularly interested in what Mr. Powell would say about inflation and possible rate hikes. As inflation is still well above target, the policy rate will continue to rise and is likely to remain relatively high for a long period of time. This news disappointed the markets and caused a fall in stock markets as well as a further rise in interest rates.
With energy prices setting new records in Europe, the European Central Bank (ECB) is also struggling to bring down inflation. There are increasing calls from those working at the ECB to announce a substantial interest rate increase of 75 basis points at the September policy meeting (which has already taken place).
Growth expectations are diminishing. High inflation and tighter monetary policy at the central banks are starting to impact the economic figures. Market sentiment is becoming increasingly negative.
The Board will continue to monitor developments closely.
| Position at the end | Q2 2022 | Q1 2022 | 2021 | 2020 | 2019 | 2018 |
| Funding level | 125.0% | 123.2% | 117.3% | 103.3% | 107.6% | 107.9% |
| Policy funding level | 118.6% | 114.8% | 111.9% | 98.4% | 105.7% | 113.3% |
| Interest | 2.0% | 1.1% | 0.6% | 0.2% | 0.7% | 1.4% |
| Return up to | -15.8% | -5.2% | 6.8% | 6.5% | 16.9% | -2.8% |
The variable net pension benefit is adjusted annually at the beginning of the year on the basis of the result achieved in the previous year. This result includes the return on investments, the development of market interest rates, and the result on death within the group of pensioners who have a variable net pension benefit.
| As the end of | 2021 | 2020 |
| Funding level | 111.27% | 104.67% |
| Result | +11.27% | +4.67% |
| Average interest rate | 0.45% | 0.00% |
| Return | 3.15% | 8.14% |
The total result achieved for the group in 2021 is +11.27%. This positive result is largely due to the increase in market interest rates in 2021 and the positive returns on investments in 2021. As a result, SPF needs to reserve less money to pay future variable net pension benefits.
SPF divides the result achieved over five years. As a result, the reduction of the variable net pension benefit over 2022 to 2026 inclusive is equal to 2.46% per year.
For more information, please see the Brochure 'Indexation’.