NN CDC Pensioenfonds tries to increase the pensions of current and former NN Group employees and pensioners to keep up with the price index. For 2018, a partial increase (indexation) of 0.87% is allowed. This article explains how indexation works.

Annual increases of pensions (indexation) are important because they ensure your pension can retain its purchasing power. Once a year, NN CDC Pensioenfonds determines whether and how much it can increase pensions to keep up with the Dutch consumer price index from October to October.

Policy funding ratio as a reference
By law, indexation is only allowed if a pension fund’s policy funding ratio is higher than 110%. NN CDC Pensioenfonds takes its policy funding ratio on 30 September as a reference point. The policy funding ratio is equal to the average funding ratio for the preceding 12 months. Using the average ratio as a reference ensures that the important decision of indexation does not hinge on the funding ratio at one point in time.

Price index
The fund calculates the increase based on the overall consumer price index for households in the Netherlands, published by Statistics Netherlands (CBS) for the months October 2017 through October 2018. The consumer price index for that period was 1.68%.

Full or partial
The pension fund is not allowed to increase pensions in line with the full consumer price index until its policy funding ratio has reached a level that ensures the pension fund will be able to grant full indexation in future years as well. That level is different for every pension fund. NN CDC Pensioenfonds will reach the required level when its policy funding ratio is around 126.8%. However, if its policy funding ratio is between 110% and 126.8%, the pension fund is allowed to grant partial indexation.

Given that the policy funding ratio on 30 September 2018 was 118.9%, full indexation for the year 2018 is prohibited by law. According to the calculation model required by law, the pension fund is allowed to increase pensions up to a maximum of 0.87%. The pension fund has decided to grant this indexation.

Click here for a more detailed explanation of the calculation.

Unused indexation 
The unused portion of the indexation is recorded in the pension fund's accounts. The pension fund will not be able to increase pensions fully or partially to compensate for unused indexation until its policy funding ratio exceeds approximately 126.8%.

How to stay informed
Read about the pension fund's financial position on the website and in our newsletters. The pension fund also publishes frequently asked questions and answers, including differences in the indexation policies applied by NN CDC Pensioenfonds and Pensioenfonds ING. If you cannot find the answer you are looking for, please contact the Pension Desk.