De Unie, in your interest

What is the coverage ratio of a pension fund?

The funding ratio of a pension fund indicates the extent to which the pension fund is considered able to meet its payment obligations now and in the future. A pension fund is funded through a funded system. This means that employees pay pension contributions during their employment. These contributions are then invested by the pension fund, so that all pensions can be paid with these proceeds.

The funding ratio is expressed as a percentage. So, in the case of a funding ratio of 100%, a pension fund has just enough cash in hand to pay all future benefits. Because there must always be a small buffer, the lower limit has been set at 110% before pensions may be increased.