NETHERLANDS - Dutch pension funds have suffered a severe 11 percentage point drop in funding ratio from March to August due to poor market performance and increased interest rates.
The average funding ratio of Dutch pension funds has fallen drastically from 112%, where it was resting in March of this year, to 101% at the end of August.
De Nederlandsche bank (DNB), the Dutch pension regulator owes this slump in part to falling equities markets. During the period between end-March and end-August, the AEX declined by 19.9% and the MSCI World Index by 10.8%.
Meanwhile, long-term interest rates declined from 4.04% at end-March to 3.35% at end-August.
Funding ratios prior to March had enjoyed a period of growth, statistics from the DNB show from September 2010 to March 2011, there was an increase of13 percentage points.
The Dutch regulator requires a minimum funding ratio of 105%, meaning that many pension funds are currently face funding deficits. Funds with funding levels below 105% must submit recovery plans to DNB, which will be evaluated in early 2012.
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