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25-11-2022
‘Better outlook for your pension’. That was the heading of the newsletter we sent you last May, about indexation and accrual of your pension. Here's an update on where your pension is at now.
As you’ve probably noticed, ING CDC Pensioenfonds has not been able to increase your pension to keep up with inflation in recent years. Even accrual of your pension has not been possible at the full rate. In 2022, however, circumstances have changed. Interest rates have risen steeply, and that’s good for your pension.
Indexation - how does it work?
Regardless of whether you're currently employed by ING, no longer employed, or retired, indexation is important because it increases your pension to keep up with rising prices. Once a year, the pension fund determines whether your pension can be increased and at what rate. The most important factor is the pension fund's policy funding ratio, which is equivalent to its average funding ratio for the preceding 12 months. If the policy funding ratio is between 110% and 143%, the pension fund is allowed to grant partial indexation.
Development funding ratios
Every year, Statistics Netherlands (CBS) measures the percentage by which consumer prices have risen in the Netherlands. If ING CDC Pensioenfonds can increase your pension, it will apply the CBS's percentage.
So…will my pension be increased?
As at 30 September 2022, the pension fund's policy funding ratio was 117%, which means partial indexation is allowed, provided the pension fund will be able to grant the indexation to all participants in the long term. The board will take a provisional decision on this matter and will inform you about the outcome in our next newsletter in December. The final decision will be made in early 2023, after which you will receive a personal letter with a confirmation.
Pension accrual - how does it work?
ING and the trade unions aim to grow your pension at the maximum accrual rate allowed under Dutch tax law. The accrual rate is recalculated every year. In 2022 the percentage is 1.784% and in 2023 it will be 1.778%. As a result of low interest rates in recent years, the fixed contribution has been insufficient to fund full accrual of your pension.
So…will my pension grow at the maximum accrual rate?
The rise in interest rates has improved the pension fund's financial situation in 2022. As a result, the fixed contribution will be sufficient to let the pension fund pay for full accrual in 2023. In other words: in 2023 there will not be any cutback of the accrual rate!
Grip on your pension
No matter how old you are or what phase your life is currently at, we advise you to check your pension regularly to keep a grip on it. On our website, you'll find handy tips and tools.
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