ING CDC Pensioenfonds’ funding ratios as at 31 January 2016 are known. The funding ratio is 105% and the policy funding ratio is 112%.
The funding ratio indicates whether the fund’s financial position on a certain reference date is adequate enough to pay out pensions accrued now and in the future. The higher the funding ratio, the better the fund’s financial position. A funding ratio of 100% indicates that the fund’s financial position on the reference date is adequate enough to pay out pensions that have been built up in the fund. The funding ratio as at 31 January 2016 amounts to 105%. Compared to December 2015, this is a decrease of 5%.
The policy funding ratio is equal to the average of the funding ratios for the preceding twelve months. The policy funding ratio provides the fund with a benchmark for making policy decisions, such as determining the amount of headroom available for indexation and the adequacy of the fund’s reserves. By taking the average for the preceding twelve months, important decisions no longer hinge on the funding ratio prevailing on any given date. The policy funding ratio as at 31 January thus amounts to 112%. Compared to December 2015, this is a decrease of 1%.
The funding ratios decreased in January due to financial market fluctuations. This was caused by an unprecedented low interest rate and a decline in stock prices. Since 30 September 2015, ING CDC Pensioenfonds has been faced with a reserve deficit. This means that the pension fund’s policy funding ratio has fallen below the funding ratio required by law. Consequently, the pension fund has had to submit a recovery plan to DNB. Read here the news item regarding the reserve deficit. The funding ratios of January do not impact the recovery plan.
The pension fund publishes its funding ratios on or around the 15th day of each month. The graph below shows the situation as at ultimo January 2016. Click here to see funding ratio developments in 2015 and 2016.
