Falling equity markets are dragging funding at four of the Netherlands’ five largest pension funds down to the 100% mark.The official ‘policy’ coverage for the €40bn metal scheme PME, as of the end of August, has dropped below 100%, which disallows it from transferring pension rights for leaving participants.Policy funding, the criterion for indexation and rights cuts, is calculated using a scheme’s average coverage over the previous 12 months. PME’s policy funding now stands at 99.8%, while its current coverage is 96.1%. Current funding at the large civil service scheme ABP (98.1%), the healthcare pension fund PFZW (96%) and the metal scheme PMT (96.4%) has also dropped below 100%, but their policy coverage remains slightly above this level.According to Mike Pernot, an actuary at Aon Hewitt, coverage ratios for Dutch pension funds over the first three weeks of this month fell by 2 percentage points on average to 100%.For now, the lower funding will only affect value transfer.From 2017, however, schemes’ coverage figures will serve as the basis for updating recovery plans, which must spell out how pension funds expect to raise their funding ratios to as much as 125% over the next 10 years (depending on their asset mix).None of the more than 150 recovery plans submitted to regulator last July mooted a rights discount as a means of shoring up funding.A pension fund, to recover on schedule, must apply rights cuts only if its coverage ratio falls below 95%.The critical funding ratio, however, depends on a scheme’s investment policy.Pension funds with more offensive investment target – having a relatively large equity allocation, for example – need to apply a rights discount at a funding of approximately 90%. BpfBouw, the €48bn pension fund for the building sector, is the only large scheme that managed to keep its funding well above 100%. As of the end of August, its policy coverage stood at 112.9%.
Keith and Therese Helly and their children Ena (4) and Ailbhe (5) outside the Ascot home they are selling. Picture: AAP/David Clark.HOMEOWNERS and would-be buyers are revelling in the potential savings from this week’s historic interest rate cut, with some ready to splurge on a holiday, eat out more or upgrade to a bigger house.Analysis provided exclusively to The Courier-Mail by realestate.com.au reveals exactly how much borrowers could benefit from the potential savings if they have a mortgage or are looking to take on a home loan.Upgraders are set to be the biggest winners, with the potential to save $1500 a year on an $880,000 mortgage — more than enough to pay for a romantic weekend away.RELATED: What the interest rate cut means for the market Home Loan (P & I) 3.49% (If cut passed on in full) Purchase price Govt fees 20% deposit Total borrowing Monthly repayments Annual savingsFIRST HOMEBUYERS – under $650k $650,000 $17,060 $130,000 $520,000 $2,332 $876FAMILIES – $650k to $1.1m $900,000 $29,160 $180,000 $720,000 $3,229 $852UPSIZERS – $1.1m + $1.1m $40,090 $220,000 $880,000 $3,947 $1,476(Source: realestate.com.au) This four-bedroom house at 14 Mackellar St, Teneriffe, is for sale for $1.9m to $2.1m.HOW MUCH COULD YOU SAVE? This three-bedroom house at 54 Camp St, Toowong, is on the market for offers from $980,000.The research looks at three different price brackets — first homebuyers, families and upsizers — and how much they could potentially save on loan repayments based on a 3.49 per cent variable interest rate if their lender passed on the 0.25 per cent rate cut in full.The calculations have been generated from the realestate.com.au Home Loans calculators and assume a 20 per cent deposit on top of associated government fees, a loan term of 30 years, and principal and interest repayments. This five-bedroom house at 837 Cavendish Rd, Holland Park, recently sold for $1.9m.Ray White managing director Dan White said the federal election outcome, combined with this week’s rate cut, would provide a “shot in the arm” for the property market.“We’ve already seen a noticeable change in the atmosphere in the last few weeks with increased inspection numbers and people more willing to raise their hand at auctions again,” Mr White said.“We’re also now starting to see early signs of more listing activity.“Along with the recent federal election result, APRA’s policy changes and improved auction activity, this decision by the RBA gives more confidence to buyers to enter the market, knowing that key downside risks have been mitigated.” The Reserve Bank of Australia cut the cash rate for the first time in nearly three years this week. Image: AAP/Bianca De Marchi.Home hunters who have been sitting on their hands for months are ready to get back into the market and listings are on the rise as confidence picks up in the wake of the federal election outcome, the first interest rate cut in almost three years and the promise of more to come.But Ms Wall said it was important for borrowers to remember the money saved from an interest-rate cut could be useful, but not life changing.“I think for people who want certainty around their expenses, and who are perhaps borrowing towards the edge of what they can afford, taking a conservative approach to all of this is the best bet for long term security,” she said. Brisbane couple Therese and Keith Helly have just put their Ascot home up for sale — and the timing could not be better.“With all the uncertainty, both politically and with the rate cut, it does make it a little bit more achievable for people who were previously umming and ahhing about getting in to the market,” Mrs Helly said. First time homeowner Stephen Nardi at the Lucent Gasworks building in Newstead. Picture: AAP/David Clark.Brisbane buyer Scott Smith recently upgraded to a five-bedroom house in Holland Park and is looking at a potential saving of more than $1500 a year as a result of the rate cut.But Mr Smith said he would use the extra money to reduce his new mortgage, rather than spend it. More from newsParks and wildlife the new lust-haves post coronavirus12 hours agoNoosa’s best beachfront penthouse is about to hit the market12 hours ago“It’s certainly going to be a benefit, and another couple (of interest rate cuts) in the offing will help,” Mr Smith said.“The other big benefit for me is that it should stimulate interest or confidence in the market, which is good because I’ve still got to sell my other house as yet.” Ms Wall said families were more likely to spend the savings on school fees or adding an extra couple of days to a family holiday.“Families may also want to use it to get a new couch or TV,” she said. Those borrowers in the $1.1 million plus segment of the market might consider looking at upgrading to a suburb they have always wanted to buy their forever home in.“These amounts are also great to put in the offset account to top up big mortgage payments,” Ms Wall said. This three-bedroom house at 156 Homestead St, Moorooka, is on the market for $609,000.Realestate.com.au general manager of financial experiences Eloise Wall said first homebuyers had a reputation for being reckless spenders, but were actually more likely to use the savings from the rate cut to reduce their mortgage or to set up their new home.“Quite often younger people will put that money into their offset account and use it to further reduce their costs,” Ms Wall said.“With the government trying to stimulate the economy this way, some retail spending is great for everyone in terms of getting set up, but money saved sooner is going to pay off better for first homebuyers in the long run.” MORE: Where it’s cheaper to buy than rent MOST POPULAR SUBURBSFIRST HOMEBUYERS (Under $650,000)Suburb Median Sale Price (12 months) YOY Change In Median Sale PriceMount Gravatt $647,000.00 -0.46%Ferny Hills $563,000.00 2.36%Chermside West $580,000.00 -1.69%Stafford Heights $600,000.00 1.35%Moorooka $635,000.00 -0.78%FAMILIES ($650,000 — $1.1m)Suburb Median Sale Price (12 months) YOY Change In MedianS ale PricePaddington $1,050,000.00 -2.78%Highgate Hill $1,002,000.00 -1.52%Toowong $872,500.00 9.40%Wilston $902,500.00 4.34%Windsor $810,000.00 0.27%UPSIZERS ($1.1m plus)Suburb Median Sale Price (12 months) YOY Change In Median Sale PriceNew Farm $1,400,000 -9.68%Ascot $1,400,000 -1.06%Teneriffe $1,462,500 -9.44%Chandler $1,750,000 16.28%Bulimba $1,390,000 7.34%(Source: realestate.com.au) While first homebuyers could save around $800 a year on a $500,000 mortgage, which would pay for a fridge or washing machine for the new house.And it would allow families saving $852 on a $720,000 mortgage to fork out that bit extra for school fees. This five-bedroom house at 50 Massey St, Ascot, is for sale for $3.395m.The young couple, who have two children and are expecting a third, plan to use the savings they will make as a result of the interest rate cut to upgrade to a bigger house.“We want to stay in the area so this gives us a bit of room to move in terms of what we’re looking for,” Mrs Helly said.“The rate cut will help us to afford a bit of a bigger house.”Alex Rutherford of Place Estate Agents, who is marketing the property at 25 Hopetoun Street, said she believed most borrowers would use the savings from the interest rate cut to pay down their mortgage, but some spent the money on eating out more or setting up a home. “Buyers on the mortgage belt will definitely be feeling a bit more confident,” Ms Rutherford said.“That extra $50 to $100 a week will be great for them.“Most will use it to slice off their mortgage quicker, but I have seen — especially the younger generation — tend to spend more on setting up the home. “And depending on the age bracket, they go out to dinner more.” This three-bedroom house at 25 Hopetoun St, Ascot, is going to auction.First homebuyer Stephen Nardi recently bought a two-bedroom apartment in the luxury residential development, Lucent Gasworks, in Newstead.Mr Nardi is likely to save around $600 to $700 a year as a result of the interest rate cut and plans to use it to pay off more of his home loan.“I might look at buying some more furniture too,” Mr Nardi said.He had saved a 30 per cent deposit for the apartment and plans to pay down more of the mortgage and buy another property. How homeowners can take action on RBA cut read more