Pensioenfonds PME will increase pensions for the first time in fourteen years next month. This is a small increase of 1.29% for approximately 167,000 people who worked in the metals and technology sector. The fund announced it on Wednesday.
SMEs can do this thanks to new rules. Funds were recently allowed to increase pensions if they have a policy funding ratio of 105%, which until recently was 110%. The policy funding ratio indicates how good a fund’s financial condition has been over the past twelve months and whether the SME is above the critical limit. This means they have enough cash on hand to implement a raise.
Other large funds should follow the example of SMEs. For example, the civil servants’ fund ABP, the largest fund in the Netherlands, has already declared that it wants nothing more than to increase pensions. More clarity on this will likely come later this month.
The announced increase in SMEs contrasts sharply with current inflation. For example, prices for goods and services were 8.8% higher last month than a year earlier.