Interest rates have been falling for 30 years. To put it simply: for people, organizations and countries with debts, that's nice. They pay less for having those debts. But that is less pleasant for people, organizations and countries with savings. Their money does not grow or hardly grows.

A pension fund is also an 'organization with savings'. So for us, the low interest rate is downright annoying. And for who thinks it couldn't get any lower? In August, interest rates fell even further.

Coverage lower in August

This has consequences for the policy funding ratio of our pension fund. It fell to 126.8% in August. Our investments also performed well.

A number of (large) pension funds are not doing well. They have a policy funding ratio that fell further in August to well below 100%. For millions of participants in those funds, there is even a threat of pension cuts in the coming years. The hope was that the new pension agreement would partly prevent this. But it doesn't seem like that now.

Incidentally, none of this applies to Mars Pensioenfonds. With a policy funding ratio of 126.8%, a reduction in pensions is not an issue. However, the low interest rates also have consequences for us.

Consequences for pensions in payment

Due to the lower policy funding ratio, it appears that we will not be able to fully increase (index) the pensions in payment of the participants in the final pay plan in the coming years. We will not be able to fully index the accrued pensions of participants who no longer work at Mars in the coming years.

Consequences for your pension in the ARP/ASP plan

Are you participating in the Mars ARP/ASP plan? Then the low interest rate is also an annoying message for you. You have saved up a pension capital. That capital grows through the contribution of premiums and the return on the investments.

As long as you are still building up pension capital, your pension will not be affected much by the low interest rate. You only notice this when you buy a pension with your capital from an insurer. This pension purchase is based on the then prevailing interest rate. If the interest is high, you can buy more pension. But now interest rates are very low. This means that you can currently buy less pension with your pension capital. Less than, say, a year ago.

Is there nothing that can be done? Yes, but for that you have to take action yourself. If you do not pay the maximum voluntary premium, you could increase it, and Mars will also invest extra. For example, you can also choose to continue investing after you retire (choose a variable pension). Find out what your options are and, if necessary, consult with a financial advisor.