It is in the news all the time: the funding ratios of almost all pension funds in the Netherlands fell at the end of 2018. The decline was greater for one than for the other. But overall, the last quarter of 2018 was not favorable for pensions. The funding ratio has also decreased at Mars Pensioenfonds. But we're still in good shape.

Why have the funding ratios decreased?

This is mainly due to the persistently low interest rates and the deep declines on the stock markets worldwide. They have made a big hole in the assets of pension funds. With funds with some 'fat on the bones', the damage may not be that bad. But funds that were already not doing very well are really suffering from this. A few large pension funds in the Netherlands probably cannot avoid reducing pensions (shortening).

The situation at Mars Pension Fund

Fortunately, we do not expect these drastic measures at Mars Pensioenfonds. At the end of 2018 we were able to increase the pensions in payment with a supplement (indexation). We were even able to make up for missed allowances from previous years. And our financial situation is still good with a policy funding ratio of 133.3% at the end of December 2018. As of January 2019, this is 132.5%. We cannot predict what will happen next in 2019. For the time being, we are waiting to see whether the funding ratio will rise or fall. If we keep up to date with the current funding ratio, we will still have sufficient reserves. The graph shows the development of the funding ratios over the past year.

Suppose the funding ratio rises again

In the short term, nothing will change. At the end of 2019, the board will determine whether the pensions can be increased. This depends on the financial situation at that time. An increase in your pension is therefore never certain. But if the funding ratio rises, the chance of an increase is of course greater.

Suppose the funding ratio continues to fall

The chance that we will not be able to increase your paying pension with a supplement at the end of 2020 then increases.

If the funding ratio continues to fall below 123%, we'll have to make a recovery plan. This describes how MPF will regain a healthy financial situation within 10 years. The employer Mars also plays a role in this by adding money during the first 5 years that the funding ratio is too low, thus ensuring that pensions do not have to be cut.

Lowering is not an option

You see, a decision to reduce pensions is certainly not an issue at Mars Pensioenfonds. But what the government decides about pensions is an uncertain factor. MPF keeps a close eye on these plans. There seems to be a good chance that the discussion about the pension system in the Netherlands will be reopened soon. We will keep you informed.