Recovery plan to financial health
A recovery plan is a financial action plan made by pension funds. We need to make a recovery plan if the coverage ratio is too low, as laid down in the Pensions Act. The coverage ratio reflects the fund's financial health. It reflects the relation between PME's assets and the amount needed to cover the cost of all pensions - both now and in the future.
Why do we have a recovery plan?
We have a recovery plan, because our financial situation is insufficient and the coverage ratio is too low. We will have regained our full financial health when our coverage ratio is approximately at 120%. When the coverage ratio drops to a lower percentage, we make a recovery plan, which is renewed annually.
How does the recovery plan work?
In the recovery plan we explain how we will restore the coverage ratio within 10 year to the proper level. In this context, we use a future scenario for interest and returns. It is, however, not certain that this scenario will become a reality.
What if the coverage ratio does not improve enough?
In that case we must communicate which other measure we will take. The recovery plan is based on the current pension scheme. The new developments of the pensions agreement have not been taken into account.
What are the results of our recovery plan?
With its recovery plan, PME shows that sufficient reserves will be restored within 10 years (coverage ratio higher or equal to 120.3%). The overview (pdf, in Dutch) shows this. The recovery may proceed more quickly than expected. Or more slowly. In that case, additional measures are required. Such as delaying the increase of pensions. Or - worst-case scenario - cutting the pensions.
Financial crisis plan
The board of PME has compiled a financial crisis plan (pdf, in Dutch) that describes what we must do if we end up or are likely to end up in a financial crisis.