These are turbulent times for pension funds. The investment results are disappointing and we are dealing with a low market interest rate. Nevertheless, the financial situation of Mars Pension Fund is still reasonable. I would like to take you through the current developments and their financial consequences for our pension fund.

Declining policy funding ratio

In 2015, our policy funding ratio was fairly stable. Every month the policy funding ratio was around 125%. This means that we had about a quarter more assets compared to our pension liabilities. It should be noted here that the liabilities were very high because we had to rely on a very low market interest rate.

In early 2016, the interest rate fell even further. As a result, our funding level fell to around 120%. It is not expected that the market interest rate will rise in the short term. Therefore, the funding ratio is likely to fall between 110% and 120% in the coming months.

Buffer

Despite the falling policy funding ratio, we still have a "buffer": the assets of our pension fund exceed our liabilities. Nevertheless, it is important that the policy funding ratio starts to rise again. After all, we depend on the funding ratio to be able to increase our pensions by means of a supplement. Our funding level does not currently allow for a full supplement to be granted.

We should also bear in mind that the low interest rate also goes hand in hand with low inflation. A lower supplement therefore has less effect if inflation is low than if it is high. As soon as inflation rises significantly, the interest rate will rise again. This is favourable for our pension fund.

Our ambition is to get close to a funding level of 130%. And preferably above that. At that point we will be able to grant a full supplement again.

A good return

Finally, a word about the investments. The financial markets are quite unstable. In these turbulent times, it is particularly important to spread risks well. Over 2015, under difficult circumstances, a nice return of more than 6% was achieved. This return was well above the average for Dutch pension funds. In the first quarter of 2016, the investment results were less. In combination with the low interest rate, this caused the previously mentioned fall in the funding level.

The board would like to keep you informed about the developments and the financial situation of MPF. I would be happy to come back to this later in the year.

Greetings, also on behalf of the rest of the board,

William van Ettinger

Chairman of the Board of Mars Pension Fund