Frequently asked questions not to increase pensions as of 1-1-2024

In response to the announcement that pensions will not be increased as of January 1, 2024, a number of questions have been asked. In this post, we will answer the frequently asked questions.

1. How is the amount of the increase in pensions determined?
   Pensions can be increased each year by a maximum of the increase in consumer prices. The board takes an annual decision on this. Pensions can never be increased by more than the increase in consumer prices.To determine the increase in consumer prices, we use the consumer price index of the Central Bureau of Statistics (CBS). We are looking at the period October – October. Consumer prices over the period October 2022 – October 2023 decreased by 0.41%. There is no increase in consumer prices and therefore no possibility of increasing pensions. However, in the event of a fall in prices, pensions will not be reduced.If there is an increase in consumer prices, the increase in pensions will also depend on our policy funding ratio. Read more about this in the next question.
2. The (policy) funding ratio is high. This means that there is enough money to increase pensions as of January 1, 2024. So why are pensions not being increased?
   First of all, there must be an increase in consumer prices (see the answer to the previous question). If there is an increase in consumer prices, the level of the policy funding ratio as at September 30, 2023 will determine whether pensions can be increased with a full increase in consumer prices or partially.An increase of pensions can only be granted if the policy funding ratio is at least 110%. If the policy funding ratio is between this lower limit of 110% and the current upper limit of around 140%, an increase in pensions (indexation) can only take place partially. If the policy funding ratio is equal to or higher than this upper limit, full indexation can take place.The policy funding ratio was 134.4% on September 30, 2023. According to the legal rules and our pension increase policy, we could partially increase pensions. However, we cannot increase pensions because consumer prices have fallen rather than risen.
3. I have a feeling that prices have gone up. How comes the Heineken Pension Fund to the conclusion that prices have not risen?
   That feeling is true. The prices of food and many other things have risen in the past year. However, energy prices have fallen considerably. As a result, consumer prices have fallen overall. It is important to know that CBS has changed the way in which they calculate consumer prices. In 2022, energy prices counted heavily. In June 2023, CBS adjusted the way in which energy prices are incorporated into consumer prices. Hopefully in the future, this will not lead to the same extreme influence of energy prices in consumer prices. In this article, CBS explains the new method in more detail. Basically, the bottom line is that the increase in prices was overestimated in October 2022 and underestimated in October 2023.
4. Where can I find more information about CBS consumer prices?
   On the CBS website. In this news release on the CBS website, you can read more information about the increase in consumer prices in October 2023.
5. Why can other pension funds increase pensions and Heineken Pension Fund cannot?
   Each pension fund has its own pension increase policy and the financial situation of each pension fund is different. For example, a pension fund may use a different period in its policy to assess the change in consumer prices. We use the period October – October. For example, some other pension funds use July to July: then there was an increase in consumer prices. However, the increase in the previous year was less high in the period July and July than in October and October.Some pension funds have only partially increased pensions in 2023 and can (partially) make up for this unincreased part in 2024 on the basis of temporarily expanded statutory rules. This does not apply to us because in 2023 we have increased pensions by the full increase in consumer prices.

   Year	Increase in pension	Consumer prices
   2024	0,00%	-0,41%
   2023	14,33%	14,33%

6. Why can’t we be compensated now for missed increases from the past?
   It is our ambition to achieve a pension that retains its value. In order to make up for missed increases in the past, statutory rules apply with regard to, among other things, the level of the policy funding ratio. Despite our relatively high policy funding ratio of 134.4% on September 30, 2023, our policy funding ratio is not sufficiently high to make up for missed increases in the past.