Indexation risk

The indexation goal (indexation linked to the development of contract wages in the government and educational sectors) introduces the risk of wage inflation. Wage increases in government and education lead to an increase in the accrued pension liabilities, thereby leading to higher pension obligations. This involves an exogenous risk which ABP factors in, yet cannot manage. ABP can however respond to this by using the Board’s discretionary authority and to refrain from implementing full indexation.

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