An inflated Risk

The Dutch Central Bank issued a warning in March that recent market volatility was seriously impacting pension scheme cover ratios - but does this focus on nominal liabilities risk missing the increasing danger posed by inflation? By Aaron Woolner

Milton Friedman described inflation as "taxation without legislation", but for Dutch pension schemes the link between rising prices and government action is all too clear. The level of indexation that schemes can grant their members is dependent on the nominal coverage ratio. This allows indexation uplifts on a sliding scale, with none granted at less than 105% of nominal liabilities, and full indexation when the cover ratio reaches 125%.

But for some schemes the notion of achieving indexation