Forward financial situation 2022

Forward's financial situation improved significantly in 2022, with the current coverage ratio ending 31 December 2022 at 143%, almost 20% point higher than the previous year. This also increased the policy coverage ratio – the average funding ratio of the last 12 months. This rose by 17% point to 139%.

In this article you can read more about Forward’s key figures as per 31 December 2022.

All figures in this article are preliminary year-end figures. We will publish the final figures in the annual report in a few months' time.

Assets decreased
Over the whole of 2022, Forward suffered a significant loss on investments of more than 20%. Despite pension contributions received, the assets in 2022 fell by approximately € 60 million. On 31 December 2022, Forward's assets were € 464 million.

Under Investing you will find more information about how the total return was achieved.

Pension obligations fell even more sharply
During 2022, the interest rate that pension funds use to calculate the pension obligations (the value of all current and future pension pay outs) multiplied: it went from about 0.7% to 2.2%. This resulted in an exceptionally large fall in obligations during the year. This is because when interest rates are high, a pension fund needs less money to pay out all current and future pensions than when interest rates are low. This works just like a regular savings account: if the interest rate is 1%, you have to put in more to reach your savings goal many years from now than when the interest rate is 5%.

Overall, the pension obligations fell by almost € 100 million to € 324 million due to the rise in interest rates. Despite twelve months of new accrual, Forward therefore needed much less money at the end of 2022 to pay out all future pensions than at the beginning of that year.

Policy coverage ratio rises
Over the whole of 2022, both Forward's obligations and assets decreased. Because the fall in obligations exceeded the fall in assets, the current coverage ratio went up by almost 20% point to 143%.

Due to the increase in the current coverage ratio, the policy coverage ratio (the average coverage ratio of one year) automatically increased as well. It went up by 17% point during the year, from 122% to 139%.

Forward	31 December 2022	31 December 2021
Assets	€ 464 million	€ 523 million
Pension obligations	€ 324 million	€ 423 million
Return on investments	-20.8%	4.5%
Current coverage ratio	143%	124%
Policy coverage ratio	139%	122%
TBI coverage ratio	141%	129%
Interest rate	2.24%	0.67%

Explanation and importance of the coverage ratios
The coverage ratio shows us the relation between the assets (the value of our investments) and the pension obligations (the value of all future pension pay outs). A coverage ratio of 100% means that a pension fund has just enough money to pay out all the pensions it is obliged to – now, and in the future.

Whether the annual pension increase (indexation) is possible or not, is determined by two different coverage ratios of Forward as per the end of October: 

• Policy coverage ratio: the average coverage ratio of the last 12 months.
• TBI coverage ratio: the coverage ratio at which Forward can fully increase your pension. TBI stands for future-proof indexation (‘toekomstbestendige indexatie’): according to the law, we can only fully increase if we also expect to realise this in the future.

The table below indicates what happens at Forward in case of various situations:

If the policy coverage ratio is…	Is indexation possible?
higher than the TBI coverage ratio.	Yes, full indexation is possible.
between 110% and the TBI coverage ratio.	Only partial indexation is possible.
below 110%.	No.
below 100% for a prolonged period of time without expectation of short-term recovery.	No, AND Forward must reduce your pension.

On the Dutch Forward website you can find monthly information about our financial situation.