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Published on 15 December 2022

Your pension will increase by 10.84% as of 1 January 2023

Bpf Koopvaardij tries to increase your pension each year with a supplement. The aim of this supplement is to increase the pensions to some extent in line with the cost of living in the past year. In our news item of 30 November, we told you about the level of indexation as of 1 January 2023.

In this news item, we explain more about this indexation.

Your pension will increase by 10.84% with effect from 1 January 2023

The increase consists of two components:

  • An additional supplement of 0.84%
  • A 10% supplement

Below, we explain both supplements.

re 1) An additional supplement of 0.84%
On 20 July 2022, the board of Bpf Koopvaardij decided to grant an additional supplement of 0.84% with effect from 1 January 2023. The fund is doing this on top of the 0.44% supplement that had already been granted with effect from 1 January 2022. The board was allowed to do this because the government has temporarily relaxed the rules on pension supplementation (indexation). Pension funds may temporarily use a lower limit calculating supplements. This means that an additional supplement is possible. Bpf Koopvaardij has used this statutory possibility.

Bpf Koopvaardij may grant the extra supplement only if it explains a number of components: 

  1. the expectation that built-up pension rights and entitlements will be ‘converted’. By this we mean that these pensions will be transferred to the new pension scheme;
  2. the principle that the additional supplement is granted in the interests of all members, former members and pensioners.
  3. the impact of the additional supplement on different generations.

We explain these three components in more detail below.

re a. Expectations that pensions will be converted
Employer and employee organisations in the merchant navy sector (i.e. social partners) are jointly studying the new scheme. One part of the new scheme is a decision on the conversion of the pensions. The study is ongoing, but social partners have not yet taken final decisions. It is neither necessary nor possible at present, as the legislation is not yet final.

Bpf Koopvaardij is now allowed to grant the extra supplement only if it expects pensions to be converted, and for that they need to know the viewpoint of the social partners. They recently revealed that they consider the option of conversion to be a realistic option. They will take the final decision regarding this matter at a later date.

Bpf Koopvaardij then conducted its own review of whether conversion was in the best interests of all those entitled to pensions. Bpf Koopvaardij sees no reason to deviate from the expectation of the social partners. Accordingly, Bpf Koopvaardij expects pensions to be converted at the start of the new pension scheme.

re b. Supplements are granted in the interests of all members, former members and pensioners
Bpf Koopvaardij considered at length whether all interests had been properly taken into account. Is it fair, to both young and old? Can we be sure that everyone will benefit? For years now, pensions have not increased or only partially increased. Everyone who receives a pension felt it in their pockets. With pensions increasing, they will notice it immediately. Their purchasing power improves.

For those not yet receiving a pension, we make regular calculations. That calculation is also on the pension overview, and we have now also made that calculation. If you would like to know more, read our news item of 21 July 2022.

re c. The impact of the additional supplement on different generations
In the previous news item, you saw that we made three calculations. We calculate using three amounts. The first amount is the expected pension (neutral weather). The second amount is the pension if things are unfavourable (bad weather). And the final amount is the pension if things are favourable (good weather). We have calculated the amounts with and without supplements, for all age groups. From these calculations, we draw the following conclusions:

  • in the neutral scenario and in the case of bad weather:
    • it makes little difference to young people whether or not Bpf Koopvaardij increases pensions in 2022;
    • seniors/pensioners will benefit from the supplement;
  • if things are favourable (good weather), everyone will benefit.

The Bpf Koopvaardij board weighed all aspects carefully. Bpf Koopvaardij concludes that granting an additional supplement is justified in 2022.

re 2) A supplement of 10%
You will receive a supplement of 10% as of 1 January 2023. Annually, Bpf Koopvaardij decides on granting supplements. For the supplement from 1 January 2023, we look at the increase in the consumer price index over the period from July 2021 to July 2022. That increase was 12.44%. In principle, the pension fund wants to grant 50% of this increase as a supplement. But the temporarily relaxed legislation also allows the pension fund to do more if there is room to do so.

In this case too, as explained above at point 1, Bpf Koopvaardij may grant the extra supplement only if it explains a number of components. Below, we provide this explanation.

  1. Bpf Koopvaardij expects that the built-up pension entitlements and rights will soon be "converted
    By this we mean that these pensions will be transferred to the new pension scheme. If you would like to know more, please read the explanation we give above at point 1.

  2. The additional supplement is granted in the interest of all members, former members and pensioners
    The supplement may be granted only if the fund's financial situation is sound enough. Can the pension fund continue to pay all pensions in the future? And converting the built-up pensions will also become more difficult in the new pension scheme. If some of the assets are now being used for supplements, there is a risk that the funding ratio will be lower. And if it is too low, pensions will be reduced. Bpf Koopvaardij wants to avoid this situation.

It is not yet known what the new scheme will be like. Some of the assets might be used to ensure that the assets are distributed fairly among all groups. Or the assets will be used as an additional buffer in the new pension scheme. If the pension fund uses all that money now for supplements, it cannot be used for anything else.

  1. Bpf Koopvaardij has looked in detail at the impact of the additional supplement on different generations

The high inflation in recent times has direct consequences for pensioners. They find they can buy less with their pension benefits. For those who have not yet retired, the impact is not immediate at present.

Again, as in July, we have made three calculations. We calculate using three amounts. The first amount is the expected pension (neutral weather). The second amount is the pension if things are unfavourable (bad weather). And the final amount is the pension if things are favourable (good weather).

We calculated the amounts in two situations. In the first situation (dark blue line), we calculate the results if we grant a supplement of 5.3%. That is the supplement we are allowed and able to give in any event based on the fund’s standard supplement policy. In the second situation (light blue line), we calculate the results if we grant a supplement of 10%. That supplement also includes the extra room resulting from the temporarily relaxed legislation.

Your pension in neutral weather

Median pension performance

 

Your pension in bad weather

Pension performance in bad weather scenario

 

Your pension in good weather

The good weather scenario is less important in deciding whether or not to increase pensions. After all, when the weather is good, everyone benefits.

From these calculations, we draw the following conclusions:

  • in the neutral scenario and in the case of bad weather:
    • it makes little difference to young people whether or not Bpf Koopvaardij increases pensions in 2023 by 5.3% or by 10%;
    • seniors/pensioners will benefit more with the 10% supplement;
  • if things are favourable (good weather), everyone will benefit.

Conclusion
Based on these considerations, the board of Bpf Koopvaardij believes that a supplement 10% is appropriate. As a result, part of the assets of Bpf Koopvaardij go directly to the pensions of members, former members and pensioners. This is in line with Bpf Koopvaardij's policy on allocating supplements. However, sufficient assets also remain for the future and for the new pension scheme. The social partners and Bpf Koopvaardij are jointly considering how exactly those assets will be used in the new pension scheme.