Page 2 - Information Caisse des pensions mars 2019 GB

ADAPTING THE BENEFITS PLAN
When we look at the requirement for return imposed by the increasing proportion
of pensioners with regard to assets and
the drop in financial performance on the markets, we see a gap in the financing.
This means that we need to adjust the benefits plan downwards for future years through a combined approach: reducing the conversion rate and increasing contributions.
How will this actually affect you?
The conversion rate, used to convert retirement capital into annuities, is dictated by statistical longevity of pensioner on taking retirement and the expected performance of long-term investments.
The Pension Fund Board has decided to maintain competitive conversion rates compared to the market, being 5.71% for 65 year old males and 5.86% for 64 year old females, as of 1st January 2023.
How? By combining:
• a gradual reduction of current conversion rates between 2021 and 2023,
• a 0.8% increase in contributions for risks and expenses from 1st July 2019, making 1.25% for employees (+0.25%) and 2.55% by the employer (+0.55%),
+0,55%
Employees Employer
• an optimisation of asset investment, which should help to increase future returns.
+0,25%
1,25%
2,55%
x Conversion rate Retirement capital acquired
Monthly pensions
Based on a study carried out in 2018, the conversion rate for a 65 year old male or a 64 year old female should be around 5.2% in order to break even.
Exceeding this rate would automatically mean losses for the Pension fund every time a person retires.
A benchmark for multinational companies in our industry and the banking sector was analysed and conversion ratios are between 5.2 and 5.8%.