NETHERLANDS - The average funding ratio of Dutch pension funds rose from 99% to 107% over the last quarter of 2010, figures from the country's central bank show.
De Nederlandsche Bank said the improvement of the funding ratio - the difference between available assets and liabilities - was mainly associated with increasing long-term interest rates, which strongly depreciated pension funds' liabilities.
The liabilities of pension funds, represented by the so-called technical reserves, fell by €62bn ($86bn) to €699bn over the three months. This fall marked the first decline in pension fund liabilities since June 2009. The sustained increase up to the third quarter of 2010 was especially due to a decline in interest rates.
The life expectancy of the Dutch also increased more rapidly than had been anticipated, the bank said. During the final quarter of 2010, long-term rates increased again, from 3% to 3.8%. The higher rate allows pension funds to reduce reservations in respect of future benefit payments.
Since March 2009 pension funds' investments had been steadily appreciating, the banks added, but while the value of pension funds' equity investments increased during the fourth quarter of 2010, this appreciation did not offset the loss incurred on fixed-rate investments.
"The rise in funding ratios occurred across the range of pension fund types," the bank said. "The average funding rate of industry-wide pension funds increased from 96% to 105% during the last quarter, whereas that of company pension funds rose from 106% to 112% and that of occupational pension funds from 109% to 117%.
"The number of members whose pension funds have funding deficits - i.e. a funding ratio below 105% - came down from 4.8 million to 3 million."
Jonathan Stapleton asks whether newly-accredited professional trustees should be a statutory fixture on pension scheme boards.
Savers are being warned by the Insolvency Service to guard their pension pots from investment scammers and negligent trustees as it winds up 24 companies.
Respondents say they should only be required in certain situations as the system is not broken.