An overview of the Pension Agreement
Under the new pension system you will accrue your own personal pension capital. You will use this to purchase a pension benefit when you retire. This will provide a more transparent view of the contributions you pay in and the capital you accrue with your contributions. In addition, pensions will move more in line with investment results. Pensions will increase more quickly if the economy is good but they will also fall more quickly in times of economic hardship. This will make pensions in the Netherlands more future proof. Are you accruing a pension with SNPS? If so, you are already accruing your own personal pension capital. View your accrued pension capital at my-Shell pension. However, it should be noted that certain changes will still apply.
The main aspects
The Pension Agreement outlines the general features. There is still much uncertainty regarding the exact specifications. These are the rules that are currently known.
The state pension age will rise less quickly
From 2025, the state pension age will rise in line with average life expectancy. This means that the state pension age will rise less quickly. Would you like to know when you will start to receive your state retirement pension (AOW)? You can find this on the Sociale Verzekeringsbank (Social Security) website: SVB.nl (only in Dutch).
2 types of pension plan are to be introduced
Rather than the current career average salary scheme, in which the amount of pension benefit is the basic principle, there will be 2 options for the new pension scheme. Both plans are based on the amount of the contributions paid in rather than the amount of pension benefit paid out.
The solidarity contribution plan
The participant accrues an individual pension capital with the contributions paid on his behalf and the investment results. The contributions will, in fact, be invested together with the pension contributions from the other participants. There will be a single investment policy for both active participants and pension beneficiaries. With the new pension plan, the solidarity reserve will also be introduced. The purpose of the reserve is to enable the sharing of risks, such as investment risks and longevity risks (the pension capital can therefore increase or decrease).
The pension fund decides the distribution formula. After the retirement date, the participant receives a lifelong benefit payment by periodically withdrawing part of the capital reserved for them. After retirement, the pension benefit continues to move in line with the investment results and can therefore be higher or lower depending on the investment results and the interest.
The flexible contribution plan
Under this plan the participant also accrues a personal pension capital with the contributions. These contributions will also be invested together with the pension contributions of the other participants. There will be a different investment policy for active participants than for pension beneficiaries. However, in this plan participants can decide for themselves which risks they want to take with the investment, by choosing a particular risk profile for example. Participants do not have to make a choice if they do not want to, a good default has been arranged in that case. After retirement, the participant purchases a pension benefit with the accrued capital. This might be a fixed pension benefit, but it is also possible to continue investing after retirement. If the investment results are good, the pension can rise, but if the results are poor, the pension can then be lower. In this case, the pension is variable. This flexible contribution plan is very similar to the SNPS scheme. View the SNPS scheme.
Starting on 1 July 2023: the option to receive a lump-sum payment when you retire
When you retire, you will have the option of receiving a one-off payment of up to 10% of your pension as of 1 July 2023. If you choose to receive a lump-sum payment, your income will be higher initially and lower later, because you have taken an amount from your pension pot. This will also have consequences for your tax return and any supplements you are receiving.