Questions and answers about recent developments on the stock exchanges
- What is the impact on the funding ratio of Philips Pensioenfonds?
Recent developments in financial markets have had a negative impact on the investments of Philips Pensioenfonds. In our view, the situation in financial markets requires increased monitoring. It is important to realize that because of the upcoming transition to the new pension scheme, Philips Pensioenfonds already reduced its investment risk in 2021. This was done to protect the financial health of the funds. Against this background and taking into consideration that the current situation is very uncertain, we feel that there is no immediate reason to make additional adjustments to our investment policy.
- What is Philips Pensioenfonds doing now that the stock markets are so volatile?
Recent developments have had a negative impact on Philips Pensioenfonds’s assets. However, there is no reason to react hastily and make immediate adjustments to our investment portfolio. However, stock market developments do require increased monitoring. We are monitoring the situation more closely and assessing whether we have reasons to make interim adjustments. Philips Pensioenfonds already opted in 2021 to reduce the investment risk in order to provide additional protection for the buffer due to the upcoming transition to the new pension scheme. At this time, due to the high level of uncertainty, there is no reason to make additional adjustments to our investment policy. As stated, we are continuously monitoring whether there are reasons to make adjustments.
- What does the decline in the stock markets mean for your pension?
The recent decline has no direct impact on the pensions of our participants. The developments on financial markets in general and on stock market in particular may have an impact on the amount of indexation that can be granted on 1 April 2026.
- Does the decline affect the transition to the new pension scheme?
Protecting the financial buffer is an important objective in upcoming period until the transition. At the transition moment, the buffer will directly or indirectly benefit the participants. As stated in the paragraph 'What is Philips Pensioenfonds doing now that the stock markets are so volatile?', in 2021 we already reduced the investment risk of our investments. Furthermore, we have largely reduced the amount of interest rate risk. Therefore, the financial position of the Fund has been impacted less by recent developments in financial markets than otherwise would have been the case. However, as we are a pension fund, it is unavoidable that financial position of Philips Pensioenfonds will – to some extent – be affected by developments on financial markets. And the funding ratio at the time of transition to the new system (intended transition date is 1 January 2027) is of great importance for, among other things, the level of our participants’ pensions immediately after that transition. You can read more about this in this article. Unfortunately, predicting the level of the funding ratio at the time of the transition is therefore impossible.
