Funding ratio shows slight increase
PME's funding ratio is experiencing a steady positive trend during the first quarter of 2023. The current funding ratio increased from 110.4% at the end of December to 111.5% at the end of March, confirming a slow upward trend. This is caused by a cautious increase in return, combined with interest rates that are still high. Capital increased from approx. €49.8 billion to €51.1 billion.
Key figures Q1 2023
- Current funding ratio as at 31 March 2023: 111.5%
- Policy funding ratio as at 31 March 2023: 112.7%
- Investment return Q1 2023: +/+ 2.41%
- Capital increased to approx. €51.1 billion in Q1 2023
- Pension commitments increased to approx. €45.8 billion in Q1 2023
Eric Uijen, chairman of the executive board: "PME could provide indexation twice in 2022, thanks to a temporary relaxation of the rules in anticipation of the new pension system. Following a careful process and debate, the House of Representatives has approved the Future of Pensions Act. Now the Senate is going to debate the bill. It is doing so at a time when interest rates are high and large funds seem to have a sufficient funding ratio to finance the transition to the new system. I hope the Senate will provide clarity soon, so that pension funds can start preparing for the switch."
Capital and commitments increasing slightly
PME's total capital rose slightly in Q1, from €49.8 billion at the end of 2022 to €51.1 billion at the end of March 2023. The increase is largely due to the return portfolio, where equity, high-interest securities and alternative investments, such as forestry, resulted in returns of 5.3%, 2.62% and 6.2%, respectively. PME's commitments compared to the end of 2022 have increased from €45.1 billion to €45.8 billion. The current funding ratio at the end of March 2023 is at 111.5%.
Marcel Andringa, executive director of balance sheet and asset management: "We are seeing a stabilisation of our capital since the second half of 2022. This trend continues in 2023. At the same time, central banks around the world are taking drastic measures to counter inflation. With varying degrees of success: core inflation in the Netherlands was still 7.6% in March. It is uncertain how often and in what increments the ECB will continue to raise interest rates and what impact this will have on the financial markets, among other things. The IMF, on the other hand, warns that interest rates could slowly return to pre-COVID levels in the second half of this decade. So as a fund, we must still take different scenarios into account."