On this page we take a closer look at the various factors that play a role in the allocation of indexation. You can also go directly to one of the topics below.
Important news items | How does the Board make an indexation decision? | More lenient indexation rules & Bridging plan | Indexation table
Indexation allocation
The Board aims to increase your pension by wage inflation (if you are accruing pension) or by price inflation (if you are pension recipients or holder of a paid-up policy). Until the transition to the new pension system, the Board annually assesses which pension increase (indexation) is sensible. This is because the Board wants every participant to be able to make a good start in the new pension system and that the differences between participant groups are limited, fair and explainable until the moment of transition. As a result, the amount of indexation depends not only on the financial situation of the Fund at the time of indexation, but also on the expected and desired financial situation at the time of transition to the new pension system.
Since April 1, 2024, the Board has been given the option to use more lenient indexation rules under the transitional financial assessment framework. This makes it easier for pension funds to index their pensions, and at a higher rate. The Board will use this if necessary to make a sensible and balanced indexation decision in any year. On this page we take a closer look at the various factors that play a role in the allocation of indexation.
Important news items
Would you like to read more about how the Board has made decisions about your pension in the past period?
Here you will find an overview of the most important news items:
26 March 2024: Full indexation of our pensions at 1 April 2024
27 March 2023: Pensions of Philips Pensioenfonds members go up
28 December 2022: The Board determines annually how much indexation is justified
24 March 2022: Pensions of members of Philips Pensioenfonds to increase
29 October 2021: Using the years ahead to make a strong start with the new pension system
How does the Board make a decision about indexation?
- Every year, until the new pension scheme comes into effect, the Board determines the maximum sensible amount when it comes to increasing your pension.
- In doing so, the Board looks at a large number of relevant facts and circumstances, such as the financial situation, the level of inflation, the situation on the financial markets, differences between participant groups, the remaining period until the transition to a new pension system and the increasing of pension at other pension funds.
- The maximum is the same for all participant groups, i.e. for active members as well as for retired members and non-contributory policyholders. It goes without saying that more indexation can never be granted than is legally permitted. This may ensure that it will remain possible in the coming years for active members to be allocated a different indexation percentage than to retired members and non-contributory policyholders. But the maximum limits the differences between the participant groups in any case and thus contributes to our starting point that such differences must be limited, fair and explainable.
- The Board maximizes indexation to protect the financial buffer. The pension fund’s financial buffer at the time of the switch will be used, directly or indirectly, for the benefit of all our members when converting the accrued pensions to the new pension scheme (‘entitlement conversion’, or in Dutch ‘invaren’).
- The Fund's ambition will not change as a result of the above: the aim remains to allocate the largest possible share of our indexation ambition to all participants. But we do take into account our wish to enable all participants to make the best possible start in the new pension system.
- With partial indexation, the extent of missed indexation will increase. We take this into account when distributing the buffer over the participants' personal pension pots.
More lenient indexation rules under the transitional financial assessment framework
The Board strives for all members to a pension that is as close as possible to our ambition. Therefore, we decided back in 2021 that, as soon as the law permitted, we would apply the more lenient legal rules for indexation under the ‘transitional financial assessment framework’. The transitional financial assessment framework became available for pension funds to use on 1 July 2023, which is when the Dutch Future of Pensions Act (Wet toekomst pensioenen) came into force.
Bridging plan 2024
In the bridging plan you can read why applying the more lenient indexation rules is a sensible decision given the pension fund’s finances, and how it will affect our members in the different age categories.
We filed our 2024 Bridging Plan on 1 January 2024. This bridging plan explains why Philips Pensioenfonds wants to have the option of applying the more lenient indexation rules, why this is a sensible decision given the pension fund’s finances, and how it will affect our members in the different age categories. Now that DNB (the Dutch central bank) has approved our plan, we can apply the more lenient indexation rules, making it easier for us to index our pensions, and at a higher rate, than under the existing legal rules for indexation (also see 'Indexation table'). Under those more lenient rules, pension funds are permitted to index their pensions if their funding ratio is 105% (instead of 110%, see 'Indexation table') or higher. This means that the financial reserve may not drop below 5% as a result of the indexation. Whether the Board also makes use of the more lenient rules is taken into account annually in the assessment that you read about in the previous heading.
Indexation table: only relevant for compensation indexation
Part of the indexation policy is the so-called indexation table. Until 2023, the indexation table was the most important starting point for granting a pension increase. The indexation table indicates at which policy funding ratio the pensions may in principle be fully or partially increased or reduced. This indexation table was in line with the legal rules for 'future-proof indexing'. Because the Board now has the option to apply the more lenient indexation rules from the transition FTK, the indexation table no longer determines the maximum amount that can be awarded for the 'regular' indexation decision.
The indexation table is adjusted periodically. This adjustment relates to the so-called 'limit for future-proof indexing'. At this limit there is sufficient certainty that indexation can also be given in the future. This limit value is prescribed by law. As mentioned, this is no longer decisive for the 'regular' indexation decision. However, the limit is still relevant for granting compensation indexation. Under the transition FTK, the rules for granting compensation indexation have remained unchanged. Compensation indexation is therefore only possible if the funding ratio is higher than 136.9% (as of 30 September 2024). The current indexation table is included below.
Indexation table
| Level of the policy funding ratio | Can pensions be increased in full or in part or should they be reduced? Attention! In addition to the level of the funding ratio, the maximum indexation the Board deems responsible is decisive. This is decided annually. |
| <100% | A reduction of your pension is applicable |
| 100% - 110% | Your pension cannot be increased |
| 110% - 136.9% | Your pension can be partially increased |
| >136.9% | Your pension can be increased in full, compensation indexation is possible |
Related information
You might also be interested in the following information.
News overview
Visit our news page to find out the latest news, including information about increases in your pension through indexation.
Go to news overview
Financial position
Whether your pension can be increased, and if so by how much, depends, among other things, on the financial health of Philips Pensioenfonds. What is the pension fund’s current situation?
Go to financial position