The funding level is an important yardstick for judging the pension fund’s financial situation. It indicates to what extent the pension assets are sufficient to meet all future pension obligations, in particular the pension benefits.
The funding level was 102.8% at the end of 2016, having been at 103.7% at the start of the year. This level can be used to determine whether a pension fund needs to curtail accrued pensions and pensions in payment. Based on the funding level, no curtailments were necessary in 2016.
Besides the funding level, a pension fund must calculate the ‘policy funding level,’ being the average of the last twelve months of monthly funding levels. The policy funding level can be used to determine whether a pension fund has a shortfall and must therefore submit a recovery plan to De Nederlandsche Bank (DNB). The recovery plan outlines how a pension fund aims to achieve a higher funding level in the coming years. The policy funding level plays a decisive role in the fund's decisions on whether to index. The funding level was 98.8% at the end of 2016.
PDN was required to draft a recovery plan (a summary of which is available on our website) at the beginning of 2016. This plan was based on the financial situation at the beginning of 2016.