Pensions have not been indexed since 1 January 2024. It is not possible to increase pensions in line with price increases as, unlike in other years, according to the fund’s benchmark, prices fell (CPI derivative October-October).

What’s the reason for this? First of all, we must adhere to various legal guidelines. If we are to index your pension in line with price increases, the average coverage ratio (policy coverage ratio) must be at least 110% for partial indexation. Furthermore, we may only fully index your pension if the policy coverage ratio is more than 140%. TNO Pension Fund does meet the minimal policy coverage ratio. The next step is to look at the price increases. For this purpose, as benchmark the Board uses the Consumer Price Index excluding product-related taxes (CPI derivative) for the period October to October. The CPI derivative for the period October 2022 – October 2023 amounted to -2.02%, which means this was a period of deflation (price decreases). We are not reducing your pension, which is why indexation is 0% from 1 January. The negative indexation will also not be deducted from the retroactive indexation.

Previous years
TNO Pension Fund’s pensions over 2021 and 2022 were fully indexed in 2022 and 2023, with increases being 3.28% and 16.93% respectively. In the years before that, however, we were regularly unable to apply full indexation. TNO Pension Fund reserves had not grown enough since the financial crisis in 2008. For this reason, indexation in 2020 and 2021 was 0%. This resulted in an accumulated indexation backlog of 12.7%. However, after 15 years the first indexation backlog no longer applies, so the first backlog of 3.3% will be ignored. A retroactive indexation of 9.1% remains as of 1 January 2024. The figures for recent years can be found here on our website.

Outlook
TNO Pension Fund’s ambition is to increase the pension entitlements and pension rights of members, former members and pension beneficiaries each year in line with price increases. It should be noted, however, that full indexation is not always possible. We review our position each year, based on statutory guidelines and any additional legal options in connection with the transition to the new pension system. Read more here about how we handle indexation for an index-linked pension. To stay informed about trends in our policy coverage ratio, please visit TNO Pension Fund via LinkedIn.