Low Interest Rates Continue to Plague Dutch Pension Funds

02 May 2012 (PLANSPONSOREurope.com) – Low interest rates, brought about by tough economic times for the eurozone, have continued to plague Dutch pension funds, a spokesperson for APG told PLANSPONSOR Europe. 

New data from Aon Hewitt’s Pension Barometer reveals average coverage ratios of Dutch pension funds fell to 99% in April below the required minimum coverage of 105%.

Late last year the Dutch pension regulator by De Nederlandsche Bank (DNB) attempted to alleviate the situation by allowing pension funds to calculate an average market interest rate for the previous three months, rather than dail y changing interest rates.  

An APG spokesperson told PLANSPONSOR Europe: “This predominantly interest rates. This is such a big drag and influence on the coverage ratio that it doesn’t matter how well you invest, this will pull the coverage ratio down. It has everything to do with the situation within the eurozone because that is keeping interest rates low.

“The Central Bank could loosen accounting rules and have done so last year when the interest rate was averaged over three months. I think it is very unlikely whether they will do anything further and I doubt whether it would have any effect because interest rates have been low for quite some time now.”  

Graham Simons
editors@plansponsoreurope.com