A strong foundation helps PME weather a turbulent start to 2025

“Anyone who says pensions are boring will be proven wrong this year. Economic and political waters have been choppy. President Trump’s economic policy and, closer to home, the amendment on greater pension choice proposed by the New Social Contract (NSC) and the Farmer–Citizen Movement (BBB) – which is now in its third reading – require careful consideration. 

PME has started the year on a solid footing. We have sufficient reserves. Although the stock markets have fallen, PME has diversified its investments across a range of categories beyond equities alone. What’s more, the 90-day pause on the highest tariffs shows that even President Trump isn’t immune to the financial markets. 

Transition to new system still on track

NSC and BBB’s plans are a different story. Even after some tough criticism from the Council of State, the two parties are still pushing for an amendment that isn’t really workable. Their latest proposal would lead to legal inequality among members, undermine the solidarity and collectivity of our pension system, increase risks, and lower returns for members. We hope that the House of Representatives will stand firm. Meanwhile, we’re continuing the hard work of preparing for the transition to the new pension rules. We have a strong foundation to build on, and even in turbulent times, we’re staying the course as a long-term investor. We remain committed to working towards a sound and reliable pension scheme for all our members. That’s why I’m looking forward to the transition to the new system with confidence."

The first quarter of 2025 presented a mixed picture. The first signs of a turbulent year on the stock market are already becoming apparent. PME has posted a somewhat limited investment loss. In the same period, interest rates rose from 2.1% to 2.6%, causing pension liabilities to decrease and the funding ratio to increase to 116.4%. This gives PME a strong foundation on which to start the second quarter at the end of March. 

That foundation is being tested by the US government’s policy of disrupting the existing economic order. The trade tariffs announced by President Trump, which were unprecedentedly high, caused turmoil on stock markets worldwide. However, the 90-day pause that came thereafter and the temporary exemption for electronics helped things get back on track a bit. Nevertheless, confidence in the US as a stable trading partner has been severely dented.

Stock market prices don’t tell the whole story

PME isn’t overly troubled by the economic turmoil. We have a strong foundation to build on and invest for the long term. In addition, we have diversified our investments. This means we don't just invest in shares, but also in bonds, property, infrastructure, etc. While share price falls have had some impact on our assets, they certainly aren’t affecting our pension payments at present. 

Incidentally, under our new system, we will continue to experience fluctuations in stock market prices, just as we do now. However, our new pension system will safeguard our senior citizens against these through various measures. We do this by investing with a high degree of certainty, spreading financial results over several years and using a solidarity reserve to supplement pensions if there is a risk of a reduction in benefits. 

Unlike last year, PME will decide in October this year whether to make use of relaxed regulations regarding the possibility of increasing pensions. When that time comes, we will also look at the financial scope for a possible pension increase and what we consider to be a fair amount. This largely depends on how and whether the current economic turmoil stabilises.