What happens in the case of a deficit?
It can always occur that, despite all the precautions taken, the Heineken Pension Fund still has inadequate funding to be able to pay out all pensions in the long term. Something then has to be done. The pension provider’s task is to consider the best solution as meticulously as possible: either to increase the contributions (if possible) or not grant compensation.
The Board can also choose a combination of measures or make alternative choices. At the very worst, the Heineken Pension Fund can decide to cut back pensions.The Heineken Pension Fund has not cut back pensions over the past few years. However, it will need to do so should one of the following situations arise:
Less pension if the policy funding ratio drops below the Minimum Statutory Funding Requirement (MVEV)
In the event of a funding deficit whereby the policy funding ratio is below the Minimum Statutory Funding Requirement (approx. 104%),over a period of five years, the pension fund will basically lower pension entitlements and pension rights directly by a maximum of 5%. If the necessary cut backs exceed 5% then the surplus will be spread over the year or years thereafter at a maximum of 5% per year. If the necessary cut back is higher than 25% then the cut back will be spread over a period of five years and the reduction percentage may be above 5%.
Less pension if the policy funding ratio drops below the Statutory Funding Requirement (VEV)
In the event of a shortfall, whereby the policy funding ratio falls below the Statutory Funding Requirement (approx. 124%), then a recovery period of ten years is observed in order to spread any potential cut backs over a maximum recovery period of ten years. If the VEV can no longer be achieved within ten years, then the pension fund will have to cut back on pension payments. These cut backs will be spread over a period of ten years.