Why new pension rules?
It is often said that the Dutch pension system is one of the best in the world. So why then do we need new rules? Here’s the explanation.
Your pension will be able to increase more easily
Pensions haven’t gone up for a long time, despite the fact that the economy has been doing quite well for years. That feels unfair, especially now that life is getting more and more expensive.
So why haven’t pensions gone up? This is due to the strict rules pension funds had to follow, including requirements for large financial buffers. Increases were only allowed if a fund’s financial health was robust enough.
With the new rules, things are different. Those big buffers are no longer required, meaning funds can allocate money to pensions more readily. Although no extra money is added, funds can now release more to pensioners sooner.
This change has already had an impact. Since PME plans to convert pensions to the new scheme, we’ve been able to use the government’s relaxed rules several times. For example, we did not have to reduce pensions in 2019. And we were able to increase pensions in 2022, 2023 and 2024.
Your pension will be clearer and more personalised
If you’re working, then a certain amount of money is put toward your pension every month. This contribution comes from your employer, and you usually contribute a part yourself. But how much exactly? And what can you expect in return? Many people don’t know.
The new rules will make this much clearer. You’ll have your own pension pot, with contributions from you and your employer deposited into it each month. Employee and employer associations in our sector (also known as the social partners) set the contribution amount. We’ll invest this money to grow your pot, and you’ll be able to see how much is in it and how much you’re likely to receive upon retirement. When you retire, or if you already receive a pension from us, your monthly pension will come from your pot. And it’s good to know that this pension pot cannot run dry. You will always receive a pension, no matter how old you become. Even if you live to over a hundred.
You’ll be able to log in to PME’s website to view your contributions, pension pot, expected pension and provisions for your partner and children if you pass away. And you will receive an annual pension statement, just as you do now.
Your pension will better align with your career path
Together with your employer, you contribute to your pension every month, which we invest to make it grow.
The contribution of a younger worker yields more over time than that of an older worker. That’s because we can invest for longer with the contribution of a younger person. Under the old rules, younger people didn’t derive any advantage from this situation, as everyone built up the same pension entitlement. As a result, younger workers effectively subsidised the pensions of older workers. That wasn’t a problem as long as people continued to work for the same employer, and in the long run, they too would benefit from this themselves. But times have changed. These days, people change jobs more often, go part-time for a while or become self-employed. That is one of the reasons why the rules have changed.
Under the new scheme, things will work differently. The younger you are, the more pension you can expect for each euro contributed. That money will remain yours; it will no longer flow partly to the older group. You’ll be able to see your pension pot’s balance and how much pension it’s expected to generate.
