Financial position

Current funding ratio
 

The current funding ratio reflects the value of the pension fund’s assets as a proportion of the pension liabilities (all pensions payable now and in the future).

At 31 March 2025, Philips Pensioenfonds had an actual funding ratio of 120.7%. 

Policy funding ratio
 

Another way of calculating the funding ratio that is less subject to daily fluctuations is the policy funding ratio. The policy funding ratio is calculated by taking the average of the actual funding ratios over the past twelve months. By law, pension funds are required to use their policy funding ratio for deciding on various matters, for example indexation. The policy funding ratio is also used for other purposes, including to establish whether the pension fund’s buffers are sufficient.

At 31 March 2025, Philips Pensioenfonds had a policy funding ratio of 123.6%.

Required funding ratio
 

The required funding ratio is the minimum policy funding ratio that pension funds are required to have according to the law. If a pension fund’s policy funding ratio is at the same level as the required funding ratio, this means that it has the financial buffer required by law. The purpose of this buffer is to compensate for fluctuations in the value of the pension fund’s investments and liabilities. The required funding ratio varies from one pension fund to the next, and is determined largely by the pension fund’s investment policy: the higher the risks in the investment policy, the higher the required funding ratio. 

At 31 March 2025, Philips Pensioenfonds had a required funding ratio of 115.4%.
 

Latest developments

In the first quarter of 2025, the actual funding ratio decreased from 122.7% to 120.7%. Pension liabilities increased in the first quarter due to the final indexation rates being set as of April 1, 2025. This resulted in a decrease of 4 percentage points in the funding ratio. Against the rise in pension liabilities due to indexation, there was a reduction in these liabilities due to the increased interest rates. On balance, pension liabilities decreased in the first quarter. The return on both the equity portfolio and the fixed-income portfolio was negative (see the next section for developments in financial markets). As a result, the total invested assets decreased in the first quarter. The decline in invested assets in the first quarter was greater than the decrease in the pension liabilities provision. This caused the actual funding ratio to drop by 2 percentage points in the first quarter.

Financial markets in the first quarter were dominated by President Trump’s policy aimed at reducing the United States' trade deficit. The imposition of import tariffs is part of this policy. These tariffs make it more expensive for companies in the U.S. to import products. These cost increases will likely be passed on to consumers, leading to a short-term reduction in the purchasing power of American households. This results in economic damage. The introduction of import tariffs, along with concerns over the announcement of further tariff hikes (which caused significant unrest in financial markets in early April), led to losses in stock markets in the first quarter. The return on the equity portfolio was therefore negative. The return on the real estate portfolio was also negative. As a result, the total return on the portfolio with business assets was negative as well.

In addition to reducing the trade deficit, President Trump threatened that the United States would reduce military aid to Ukraine. Furthermore, he indicated that NATO allies would only receive military assistance if they increased their defense spending. In response, European policymakers announced they would loosen fiscal policy by allowing more borrowing on capital markets to finance defense spending. This led to an increase in interest rates in Europe during the first quarter. As a result, the return on the fixed-income portfolio was also negative.