Pension funds will be forced to increase their reserves as a result of declining stock market proces. This may lead to selling shares by pension funds on the stock market.
PVK want pension funds to report on a voluntary basis when PVKÂ's stringent requirements can no longer be met. According to het Financiele Dagblad this was the content of a confidential letter from PVK to the branch organisations
With these new regulations the PVK wants to secure short term the financial positions of hundreds of pension funds. Pension funds consider this as a signal that they will be forced to sell shares to exclude risks of possible further price erosion on the stock market.
The recent drop on the stock markets has seriously worsened the financial position of many pension funds. According to the above mentioned letter, when the AEX-Index will fall below 300, PVK believes that some 300 pension funds will find thenmselves in a difficult position. The PVK considers a pension fund in danger when their cover is below 110%.
Increasingly pension funs have invested in shares. At the end of 2001 the average Dutch pension fund had 45% of its assets invested in shares. According to the PVK this requires substantial buffers, which have eroded due to the stock market price decline.
(source: PVK and Financieel Dagblad)