This is already the last blog of 2020. What a year 2020 has been. The Covid 19 virus has left an substantial effect on the year up to and including the holidays.
The pandemic has also affected the Heineken Pension Fund. Of course on the life and work of all of us, but also on the financial markets and the interest and thus the financial situation of the fund. The financial situation is expressed in the policy funding ratio. In the past year, our policy funding ratio has decreased. This is also the case with other pension funds.
Based on the policy funding ratio of September 30, the board decides whether it is possible to increase the pensions. On September 30, 2020, the funding ratio was 96.8%. Unfortunately, this is not enough to increase pensions on 1 January 2021. However, the financial situation of our pension fund is still enough to ensure that no cutbacks of pensions will need to be made.
The value of money decreases slightly year after year. You can buy less in 2021 than you could with the same amount of money in 2020. This is called ‘inflation’. The Heineken Pension Fund tries to increase your pension for inflation every year. This way, the purchasing power of the accrued pension can keep up with the rise in prices. We call this an index-linked pension. It is not always possible to increase the pensions with the rise in prices. In the event of financial setbacks, either due to investment returns that fall behind or falling interest rates, there is no possibility to grant indexation, in whole or partially. Then there will be no cutback of you pension, but your pension will be worth slightly less.
Happy Holidays and a Happy and Healthy New Year!