The Daily herald reports that the board of Foundation Pension Fund Caribbean Netherlands PCN has decided not to grant indexation on the pensions in 2014. This applies to both the benefits of pensioners and the accrued entitlements of participants, whose pension has not yet started.
Earlier this week, PCN had already announced that the pension premiums for 2014 were to be fixed at the same level as in 2013. Each year, PCN aims to adjust the pensions to the increased cost of living. Whether the pensions are actually increased, depends, among other things, on the pension fund’s investment returns and the cover ratio.
The PCN board determines if it is justified to grant an increase. In making this decision, the board does not only take the current financial position into account, but also looks at the expected development of the cover ratio in the long term. Consequently, it is not self-evident that pensions are increased each year, because there is no automatic right to indexation. Since life expectancy has increased, and the Dutch Central Bank imposes stricter requirements, PCN must hold a higher reserve to be able to pay out pensions in the short and long term. This is why PCN cannot increase the pensions at this moment, it stated Friday.
PCN is currently working on a recovery plan. The purpose of this plan is to obtain a provision that meets the Central Bank’s requirements within the statutory time limit. Furthermore, PCN aims to increase the pensions again within some years, and to keep the amount of the premium stable. For the time being, the board has decided to maintain the premium for 2014 equal to the amount that was paid in 2013. However, the PCN board does not exclude that the premium will be increased in the course of the year to further improve the financial position of PCN and to speed up its recovery.