The funding level is an important yardstick for judging the pension fund’s financial situation. It indicates to what extent the pension assets are high enough to meet all future pension obligations (including, in particular, the pension benefit payments).

Besides the funding level, a pension fund must calculate its ‘policy funding level,’ this being the average of the last twelve months of monthly funding levels. The policy funding level can be used to determine whether a pension fund needs to curtail accrued pensions and pensions that have commenced payment.

We're happy to explain how the funding level in 2023 is calculated.

Download Funding Ratio Calculation (PDF)

The funding level was 120.2% at the end of 2023, which is 3.5% lower than the funding level at the start of the year (123.7%). Besides the funding level, a pension fund must calculate the ‘policy funding level’, this being the average of the last twelve months of monthly funding levels. The policy funding level was 127.9% at the end of 2023, which is 0.8% higher than at the start of the year (127.1%).

The policy funding level can be used to determine whether a pension fund needs to reduce the accrued pensions and pensions currently being paid out. The policy funding level can also be used to determine whether a pension fund is in a deficit situation, in which case the pension fund would be required to submit a recovery plan to the Dutch central bank, DNB (De Nederlandsche Bank). The recovery plan outlines how a pension fund aims to achieve a higher funding level in the coming years. The policy funding level plays a decisive role in the fund’s decisions on whether or not to increase pensions (indexation).

Based on the indexation policy and the AMvB (‘Van Dijk Motion’) indexation that applied in 2023, the Board assessed whether, as of 31 December 2023 and considering Pensioenfonds PDN’s financial situation as at end 2023, indexation could be awarded to members, deferred members and pensioners. In its calculations the fund considered inflation benchmarks over 2022 and 2023. This was considered more logical in view of the major deviations over the past two years as well as CBS’ adjusted methodology. The Board assessed that the fund’s financial position as at end 2023 was sufficient to award more indexation as of 31 December 2023 than was possible based on the fund’s standard indexation policy. Indexation for active members amounted to 10.91% and for deferred members and pensioners indexation was 4.16%. These indexation amounts, together with the indexation awarded at the start of 2023 for 2022, are based this time on the full compensation of price rises or pay increases for all members over the above-mentioned two years. This means that both active members, as well as deferred members and pensioners did not miss indexation in 2022 and 2023 compared with the indexation benchmark.

Please consult the Pensioenfonds PDN website for more information on indexation.