The APF Pension Fund is increasing the pension of all participants by 8.73% as of 1 January 2023, after a decision to this end by the Board of the APF on 8 December 2022.

The pension of all participants will be increased by 8.73%
All participants will receive the same increase, regardless of whether their pensions have become payable or not. If you have already retired, you will receive a higher benefit payment from January 2023. This will be paid out for the first time in February, with a supplementary payment for January 2023. If you have not yet retired, the pension you are entitled to will increase, so you will receive a higher pension when you do retire.

How do we determine the indexation level (pension increase)?
When determining the pension increase, we follow the rules of the pension regulations. These state that the rise in the consumer price index (CPI) for the period from September 2021 - 2022 determines the maximum allowable indexation for the APF in 2023. The increase in the CPI for this period was 14.53%. It is not possible to fully follow the CPI due to various rules and constraints in the standard policy. According to the standard policy, the increase would amount to just under 6%.

Temporary relaxation of indexation requirements
The indexation level we are conferring as of 1 January 2023 has been made possible in part by the additional scope Minister Schouten offered in the second half of 2022 with the order of council. In anticipation of the transition to the new pension system (NPS), the order of council provided by the minister offers wider-ranging rules for increasing the pensions, so long as the intention to transfer commenced pensions and the accumulated entitlements to the NPS (known as ‘entry’) has been declared. The social partners of APF declared this intention this year. Consequently, the lower limit of the funding ratio for the indexation has been temporarily reduced from 110% to 105%.

On the basis of the order of council we have already been able to confer an additional indexation of 2.7% as of 1 August 2022. This is as compensation for the rise in the CPI from September 2020 to September 2021.

This order of council also allows the pensions to receive an additional increase for 2022. Therefore, APF have decided to increase the pensions by 8.73%. Together with the increase from August 2022, we are increasing all pensions by 11.43% (2.70% + 8.73%) partly due to this temporary relaxation. In view of the statutory regulations and the limits APF considers appropriate, this temporary opportunity has been utilized as much as possible.

A balanced decision
Central to this decision is the careful weighing up of the interests of all participants (active, deferred and pension beneficiaries). Among other factors, the large decrease in purchasing power of retired participants has been taken into account. Inflation is high this year and their pensions have not been increased for years. At the same time, we continue to keep a close eye on the uncertain economic prospects. The Board considers it important that APF remains strong enough financially after the increase in pensions to keep the chance of reductions in the coming years in the run-up to the NPS to a minimum. The APF pension fund has carefully examined the effects for different age groups.

Effects indexation 1 January 2023 for different age groups (pdf)

Pension accrual costs will rise in 2023
This indexation has been made possible in part by the sharp rise in the market interest rate. The resulting reduction in the pension provisions of the fund has a more positive effect than other factors, such as the decrease in value of the investments, increased life expectancy and cost rises.

Unfortunately, the interest rate rise is not reflected in the premiums for 2023. In our premium computations the interest rate is fixed for the period up to and including 2025. Ultimately, various other factors lead to an increase in the premium, such as increased life expectancy and high inflation. We will inform everyone of the exact premiums and accrual percentages of the affiliated companies for 2023 via a separate newsletter. The premium is expected to be much more stable in the NPS.

No guarantee of pension increase
It is expected that the rise in the CPI for the period from September 2022 – 2023 will remain high. However, there is no guarantee that it will be possible for pensions to be increased again next year. The Board of the APF Pension Fund assesses whether indexation is possible or not on an annual basis. Indexations are not guaranteed. They are conditional upon and dependent upon our financial position and prospects at the time. We therefore cannot make any promises about granting any increases in the future.