“Lower interest rates affect the funding ratio and your pension”
Pension increases are subject to statutory rules and also depend on the funding ratio of our fund. The reference date for deciding whether your pension will be increased is 30 September 2026.
Much depends on the interest rates that pension funds use to discount their future commitments to their present value. Most of the pension payments we need to make lie far in the future. For our pension fund, the 30-year swap rate is the most important interest rate. These fell from 3.24% to 3.09% in the first quarter.
In this quarter, long-term interest rates have, on balance, fallen. Interest rates fell during the first two months. In March, interest rates rose due to the war in Iran. As a result of this conflict, gas and oil prices increased sharply, leading to a strong rise in inflation expectations. Consequently, it is expected that the European Central Bank (ECB) will have to raise its policy rate.
Because the commitments are not fully hedged, lower interest rates are unfavourable for the funding ratio. This is because the value of future commitments rises more quickly than the profits on the investments in the matching portfolio, which means we have less money available to pay your pension in the future.
This quarterly report has been carefully prepared. The final figures for 2026 will be published in the anual report. You cannot derive any rights from this report.