It is a test required under law which a pension fund uses to see whether the intended pension result will be achieved in 60 years time and whether the pension result will remain within a specified bandwidth in poor economic scenarios. Because it assumes a period of 60 years, the outcome of the calculation says very little about the current financial position of the fund and the possibility for indexation in the short term.
In that case the fund and its social partners will enter into discussions with each other to answer questions such as: do we have to adjust our policy (a potential change in the risks) or do we have to lower our ambitions? It’s mainly about entering into discussions with each other and not striving for something or communicating something that is not feasible.
Yes, that’s certainly true, and all kinds of things can of course change. But you have to base your expectations on something. You therefore look at your current information and your current policy and analyse what that means for the next 60 years. The period of 60 years has been chosen so that we can also make the balanced policy between generations and the effects on young people transparent.
It is conducted by our actuarial agency Willis Towers Watson, using calculation rules that are prescribed by the Dutch Central Bank (DNB). The DNB also provides the economic sets that allow us to calculate 2000 potential future scenarios. The calculation rules are the same for all pension funds.
The most important finding is that we will remain within the specified limits. You can therefore say that the fund has passed the test. However, this excludes potential future changes to the pension system.
It does not mean anything immediate for fund members. The good results from the feasibility test are, however, a good reflection of the current situation and the adopted policy. The feasibility test is primarily a policy tool for the Board of the pension fund and the social partners. The feasibility test assesses the extent to which the pension fund’s risk attitude fits with the expected retention of purchasing power in the entire long term.