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Increases policy of TNO Pension Fund

Increases policy of TNO Pension Fund

Your pension may be increased by a ‘supplement’, ‘increase’, or by ‘indexation’. These terms mean the same thing. This supplement increases the pension entitlement or pension payment that you have accrued.

The ambition is to increase the pension entitlements and pension rights of participants, former participants, and persons in receipt of pension each year.

Measure for calculating increase
Since the changes to the pension scheme that came into effect on 1 July 2015, the Pension Fund calculates the increase on the basis of the CPI – all households. This is known as ‘price indexation’. Prior to the changes to the pension scheme, the increase was based on the general salaries policy of TNO. This is known as ‘salary indexation’.

Since the changes to the pension scheme the increase is based on the increase in living costs as indicated by the price index issued by Statistics Netherlands. The Pension Fund applies a consumer price index that disregards any changes in the rates of taxes and duties. This index is referred to as the ‘CPI base’. The increase is based on the increase in the CPI base from 1 October of the preceding year to 1 October of the year in which any increase is calculated.

Conditional award
This ambition and therefore the increase is conditional on the Pension Fund having sufficient financial resources to be able to award such an increase. The Pension Fund will decide whether the increase is future-proof: i.e. whether it can be awarded in the future. If this future-proof test reveals that the financial resources are insufficient, then the Pension Fund will award only part of the increase, or award no increase at all.

Statement of conditionality
Since the changes to the pension scheme that came into effect on 1 July 2015, Pensioenfonds TNO will increase your pension annually on the basis of the CPI – all households (the CPI base). As at 1 January 2021 your pension was increased by 0.00% (the CPI – all households 1.12%).

During the past three years, your pension has been increased as follows:

  • 0.00% for the year 2019 – prices rose by approximately 1.73% that year
  • 0.55% for the year 2018 – prices rose by approximately 1.68% that year
  • 0.42% for the year 2017 – prices rose by approximately 1.34% that year
  • 0.00% for the year 2016 – prices rose by approximately 0,4% that year

Future increases of your pension are funded from the investment return. These increases and expectations for the coming years do not automatically result in an entitlement to future increases.

Recovery plan
The new statutory financial testing framework requires the Pension Fund to maintain a higher buffer. Given that the Pension Fund does not have this higher buffer available, a recovery plan was submitted to De Nederlandsche Bank (DNB) on 1 July 2015. The recovery plan indicates that the Pension Fund is able to make an adequate recovery in order to satisfy the requirement for higher buffers within the statutory period.

Pension contribution
For 2021 the total pension contribution (employer’s part plus employee’s part) is fixed at 20,33% of pensionable salary, i.e. gross salary plus holiday allowance and other pensionable supplements such as the thirteenth month salary up to a maximum of €112,189. This maximum is based on the tax legislation that came into force on 1 January 2021.

Please note

  • The increase policy does not apply to the Interim Old-Age Pension.
  • Further information on developments is always available in the Pensioenkrant newspaper and on our website: www.pensioenfondstno.nl.