Balance ratio
The ratio between total assets and liabilities in the pension system. Should the pension system’s liabilities exceed its assets (implying a
balance ratio of less than 1) the pensions can no longer be indexed with growth in average income, as intended. For example, with a
balance ratio of 0.98 (i.e. assets are 2% lower than liabilities) the pension benefits will be automatically reduced by 2% during the year. When and if the
balance ratio rises back to a value exceeding 1, the pension benefits will be returned to their original levels. However, no repayment is made for benefits lost in earlier years.