Indexation depends on policy coverage ratio
The coverage ratio shows us the relation between the capital (the value of our investments) and the pension obligations (the value of all future pension pay outs) of a pension fund. 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.
To determine whether an indexation is possible or not, the Board of Trustees looks at the so-called ‘beleidsdekkingsgraad’. That is the average coverage ratio of the past 12 months. Unilever Netherlands and Forward made clear agreements about indexations; these are dictated by the Dutch Pension Law. This means that an indexation is only possible if it is expected that indexations will also be possible in the long term future.