The policy coverage ratio at the end of March 2016 was 115.4%. The coverage ratio is the basis for decisions by the pension fund, for example regarding any increase or decrease in the pensions. The policy coverage ratio is the average monthly coverage ratio over the past 12 months. Like all pension funds in the Netherlands, our pension fund is affected by the low level of interest rates. This is reflected in the monthly coverage ratio, which at the end of March was 110.1%, which is significantly below the average seen over the past year.

Why do low interest rates affect the coverage ratio?

Low interest rates mean that pension funds have to put more money aside for future pension benefits. Low interest rates therefore increase the obligations of the pension fund. And this has a negative effect on the ratio between the fund’s assets and its obligations, which is known as the coverage ratio (assets divided by obligations). Decisions taken by the European Central Bank to stimulate the economy mean that interest rates are falling further, and coverage ratios are also declining as a result.

What is the situation with Staples pension fund?

Staples pension fund is of course also feeling the effects of low interest rates. A declining coverage ratio means that the financial position of the pension fund is worsening.

However, we are still a long way away from having to impose curtailments, as reported in the media with respect to other pension funds. As you would expect, we continue to be cautious and are monitoring the financial position closely. Details of the current coverage ratios and financial news on the fund can be found on the website.