Every year in April, we recalculate your pension payment based on the financial results of the previous year. To minimise reductions in pension payments as much as possible, the fund has a buffer: the solidarity reserve.

Capital required to pay out pension benefits
Each year, the amount of capital required to meet the current and future pension payments for all pension beneficiaries is determined. The amount of capital required may vary from year to year due to various factors, including:

• Interest rate trends
  A fall in interest rates means that more capital is needed to fund the same pension liabilities; when interest rates rise, the opposite is true.
• Life expectancy trends
  If life expectancy increases more than previously anticipated, additional capital is required. If the increase is less than expected, less capital will be required.

Available capital
In addition to the required capital, the total capital held by all pension beneficiaries together is determined annually. The size of this available capital is influenced by the investment returns allocated to pension beneficiaries, comprising the guaranteed return – which ensures that the capital keeps pace with interest rate trends – and the excess return – which is intended to enable pension payments to be increased.

If the annual recalculation (see below for the distribution of the results achieved) shows that the available capital exceeds the required capital, all pension payments will be increased by the same percentage.
If, on the other hand, the available capital is found to be lower than the required capital, the solidarity reserve may be used to prevent or limit a reduction in pension payments.

Distribution of results achieved
Under the solidarity-based pension scheme, financial results are not reflected in pension payments all at once, but are spread over several years. Positive and negative returns are first included in a distribution fund. Each year, one-third of this distribution fund is added to the capital held by each individual. This helps smooth out fluctuations in pension payments and ensures a more stable payment pattern. If, following the distribution, there is insufficient capital available to maintain pension payments at their current level, the solidarity reserve is drawn down to make up the shortfall. Thanks to the solidarity reserve, there is little chance that benefits will need to be reduced in the future compared with the previous year.

Other purposes of the solidarity reserve
In addition to potentially offsetting fluctuations in pension payments, the solidarity reserve is also used to:

• prevent members from having a negative balance during the accrual phase;
• pay out pensions to members who live beyond the age for which their capital was intended. This ensures that everyone is guaranteed a lifetime of benefit payments.