The pension of employees and retirees in care and welfare will increase by 2.7 percent from October.
Pensioenfonds Zorg en Welzijn is the third major pension fund to decide this week to increase pensions, after PME (for the technology industry) and ABP (government and education).
It concerns the missed pension increase for 2021. Pension funds are now allowed to pay out due to more flexible rules that come into effect on 1 July. Until now, funds were only allowed to distribute an increase if their so-called funding ratio over the past year averaged 110 percent. The fund will then have another 10 cents in cash for every euro needed to guarantee future pensions. This limit goes to 105 percent.
The nearly three million employees and retirees affiliated with Zorg en Welzijn will receive a higher inflation adjustment than those of other large funds, where the increase was 1.29 (PME) and 2.39 percent (ABP). This is because Healthcare and Welfare always uses the inflation rate for the month of September – 2021 in this case. The other funds look at earlier months, when inflation had not yet risen so high.
At the same time, the increase dwarfs this year’s inflation figures: around 9 percent.
‘Relieved’
“We are happy and relieved,” says Zorg en Welzijn chairman Joanne Kellermann. “It really weighed on us that we had to warn gloomily all those years: watch out, pensions may be going down. That they are now going up, even if it is a little bit, feels like a new chapter.”
The pension fund has only been able to increase pensions twice since the 2008 financial crisis, in both cases by less than 1 percent. The last time was in 2014.
In order to be able to use the relaxed rules, Zorg en Welzijn has had to express the expectation that it will switch to the new pension system in the coming years. The fund also had to demonstrate that the decision is ‘balanced’ for different generations.
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In recent months, the financial position of pension funds has been exceptionally good, despite the fact that they suffer heavy investment losses. It works to their advantage that interest rates rise. As a result, they can assume that their investments will return faster in the future, and they now need to have less cash in hand to be labeled as financially healthy.
A version of this article also appeared in the newspaper of June 25, 2022
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