Progress financial situation at the end of 2023

In 2023 as a whole Progress achieved a profit on its investments of more than 7%. Nevertheless, the financial situation remained almost unchanged. The most important reason for this is the development of the interest rate.

In this article you can read more about the financial developments at Progress in 2023.

The figures for 31 December are provisional year-end figures. The final figures will be published in the annual report before the summer.

Initial review of 2023*
In the past year Progress achieved a positive return on its investments of 7.2%. Despite pension payments, assets therefore grew, by €200 million to more than €5,500 million.

You will find further information about how the total return was achieved under Beleggen on the Dutch Progress website.

What was striking in terms of obligations was the development of the interest rate: it went up in the first three quarters, only to fall back in the last quarter to below the level at the beginning of 2023. Such a sudden sharp interest rate fall produces a substantial increase in obligations. When the interest rate is low, pension funds need more money to pay all current and future pensions. While new pensions are no longer being accrued at Progress, the interest rate development led to an increase in obligations by almost €114 million.

The growth of the assets was completely cancelled out by the increase in obligations. The financial situation at the end of 2023 was therefore almost the same as that at the beginning of the year: both the current coverage ratio and the policy coverage ratio (the average 12-month coverage ratio) ended at roughly the same level.

 

Progress	31 December 2023*	31 December 2022
Assets	€5,511 million	€5,310 million
Pension obligations	€3,347 million	€3,201 million
Annual return (incl. coverage of risks)	7.2%	-10.3%
Current coverage ratio	165%	166%
Policy coverage ratio	171%	170%
TBI coverage ratio	133%	129%
Interest rate	2.38%	2.69%

* The figures for 31 December 2023 are provisional year-end figures. We will publish the final figures in the annual report before the summer.
 

Notes on the coverage ratios

The coverage ratio is the ratio of the assets (value of the investments) to the pension obligations (value of all future benefits). The levels of two different Progress coverage ratios as at the end of October are deciding factors when deciding on a pension increase:

• Policy coverage ratio: the average of the coverage ratios of the last 12 months.
• TBI coverage ratio: the coverage ratio at which Progress can increase your pension fully. TBI stands for future-proof indexation (‘toekomstbestendige indexatie’): by law we may only increase fully if we can expect to fulfil this in the future too.

If the policy coverage ratio is higher than the TBI coverage ratio, we can increase the pensions fully. You can see what happens when these coverage ratios relate differently to each other below the coverage ratios graph on the Dutch part of this website.

 

April 2024