What are the risks involved?

Accrual and pension payments extend over a lengthy period of time. It can take as long as 80 years from the start of accrual up to the last pension contribution. Over such a long period of time the world changes and consequently risks can arise that form a threat to your pension. Those risks could possibly lead to a shortfall.

The Heineken Pension Fund attempts to be prepared for the risks that can threaten your pension. And that has not always gone well in the past. For instance due to the rapid rise in life expectancy which has been far greater than we expected. If pension scheme members  become older on average, then their pensions have to be paid out over a longer period of time. The Heineken Pension Fund therefore needs to have more money than foreseen.

The interest rate also affects the value of a pension. Pension providers estimate the funds they will need in advance to be able to pay out the pensions. The lower the rate of interest, the more money the pension provider needs to have ‘in its coffers’ to be able to pay out all the pensions. If the interest rate remains low for a lengthy period of time, then pensions become more expensive.

Income from investments can also be disappointing. This is why the Heineken Pension Fund ensures that the investments it makes are spread over a wide range of investments. Profit from one investment can always compensate the loss from another investment. A pension provider can also cover investment risks. However, that also involves costs. There are also other risks that the Heineken Pension Fund has to take into account in order to protect your pension as well as possible.

Since 2015, pension providers must observe the so-called policy funding ratio when taking decisions on policy. The policy funding ratio of the pension fund is important, for instance when taking Board decisions on the contribution level and granting indexation compensation. The policy funding ratio is also a significant criterion regarding the question whether the pension fund has no other option than to cut back pensions. If the policy funding ratio of the pension fund is less than 100% it may not cooperate on individual value transfers. The policy funding ratio is the average over a period of twelve months. Read more about our financial situation and our policy ratio that can affect your pension.