Pension accrual and payment are over a very long period of time. From the start of accrual to the last pension payment can be as long as 80 years. During such a period, the world changes which can create risks that threaten your pension.
What are the risks?
Nedlloyd Pension Fund tries to be prepared for the risks that could threaten your pension. For example, the rapid increase in life expectancy. This increase is in fact greater than the increase we have taken into account. As members get older on average, their pensions have to be paid out for longer. Nedlloyd Pension Fund then has to have more money than was initially counted on.
Interest rates affect the value of pensions. Pension administrators estimate in advance how much money they will need to pay pensions. The lower the interest rate is, the more money Nedlloyd Pension Fund needs to have "in cash" to be able to pay all pensions later. So if interest rates remain low for a long time, it makes pensions more expensive.
Investment results can also be disappointing. That is why Nedlloyd Pension Fund makes sure that the investments are spread over several investment types. Gains on one investment can make up for losses on another. A pension administrator can also hedge certain investment risks. This does come at a cost.
There are other risks that Nedlloyd Pension Fund must take into account to protect your pension as best it can. So the pension fund literally has to 'manage' those risks. More information about Nedlloyd Pensioenfonds' risk management can be found in the annual report.
As of 2015, pension administrators must use the so-called policy coverage ratio when making policy decisions. Among other things, the pension fund's policy coverage ratio is important for decisions by the board of trustees regarding the level of contributions and the granting of indexation. The policy coverage ratio is also an important indicator of whether the pension fund is forced to reduce pensions. If the pension fund's policy coverage ratio is below 100%, the pension fund may not cooperate in individual value transfers. The policy coverage ratio is an average over twelve months.
What if things go better or worse than expected?
On the website www.mijnpensioenoverzicht.nl, under "What if things go better or worse than expected?" you can see an estimate of your pension if there are windfalls or setbacks in the future. You will see an estimate of your total pension, including AOW and various scenario amounts. You can find more explanation of these scenario amounts under Frequently Asked Questions. At 'View your situation' you will find more explanation and a video about the scenario amounts.
Are you already retired?
Then you will see an estimate of your pension at www.mijnpensioenoverzicht.nl if there are windfalls or setbacks over the next 10 years. You will see this estimate from the time you receive AOW.
Also on the Uniform Pension Statement (UPO)
On the UPO, under "What if things go better or worse than expected", you will see an estimate of your pension at Nedlloyd Pension Fund if we face significant windfalls or setbacks. This also takes into account a possible increase in prices.