Dossier Koninkrijksrelaties reports that the Pensioenfonds Caribisch Nederland (PCN) indexes pensions by 4% as of 1 January 2022, which is fully in line with the average price inflation on Saba, Bonaire and St. Eustatius.
The board took this decision at the November board meeting. The Supervisory Board has agreed to this and the Advisory and Accountability Body (AVO) has issued a positive recommendation. In 2022, the premium will remain the same as in recent years and amounts to 22% of the pensionable salary. The ability to fully index is due to the good financial position of the fund.
The explanation for this lies in two factors. First of all, the increase in the interest rate, with which the pension liabilities are valued, plays an important role. This is caused by the rise in market interest rates. In addition, PCN achieved a positive investment return in 2021 (up to and including October 2021 this amounted to 2.8%). A striking detail here is that the local investments paid off a bit better than our international investments.
PCN’s funding ratio was 118.7% in October this year. At this time last year, the funding ratio was still 96.8%. In accordance with the requirements of the FINANCIAL SUPERVISION FRAMEWORK BES that applies to the fund, PCN must have a funding ratio of 115.1% if there is to be sufficient buffer and space to fully index.
Based on the current funding ratio, PCN more than meets this requirement and all pensions and entitlements can be increased by 4%. As a result of these developments, PCN is now also out of the short-term recovery. And that’s good news according to Chairman Harald Linkels. “The past period has been turbulent due to COVID-19 and all the changes in the field of pensions. It is important that we as a fund have stayed afloat for our participants and are even ahead of the long-term recovery plan.”
To get out of the long-term recovery plan, the funding ratio of our fund must be above 115.1% for three quarters in a row. The first quarter of this has been completed. But with the decision to index, the funding ratio drops slightly below this required minimum. The board accepts that this will take a little longer to fully recover. Last year there was negative inflation and therefore no Indexing took place. In 2020, the indexation was 0.75% and in 2019 it was 2%.