Frequently asked questions
Why are there new rules?
Why are there going to be new rules for pensions?
It may seem surprising that new rules are going to be introduced for pension benefits that people accrue via their employer. For many years, the Dutch system has been in the top three systems in the world. Nevertheless, new rules are called for. These are the most important reasons:
Clearer and more personalized pensions As it stands, many people are confused about how much they are paying for their pension and what it will provide. Under the new rules, everyone will be accruing capital via a defined contribution scheme. A ‘defined contribution scheme’ means that an agreement has been reached on how much money you and your employer contribute towards your pension. That money is invested. Later, you see how much money you put in together with your employer and what the investment has yielded. That is how you accrue capital for your pension. The pension fund estimates your pension based on the capital for your pension.
Pensions may increase faster than they can now In the current situation, even if the economy is doing well, pensions sometimes don’t increase. That doesn’t seem fair. Going forward, pension funds will no longer be required to hold large reserves. Because of this, pensions may rise more quickly if the economy is doing well. The downside is that (expected) pensions may also fall more quickly. Pension funds will still be doing all they can to ensure that retired persons’ pensions are reduced as little as possible. And it’s good to know that the capital can never ‘run out’, not even if you live to a ripe old age. Together, we will make sure that everyone gets a pension.
Your pension benefits are more in keeping with your contributions and investment returns People sometimes take a sabbatical, start working part-time or start their own business. As it stands, rules for pensions don’t really cater for this. Your pension benefits are not really in keeping with your contributions and the return on investment that you have achieved. Under the new rules, the capital for your pension continues to grow, even if you are not a member of a pension fund. The pension fund will continue to invest the money.
Who decides on the new pension scheme and the transition to the new scheme?
Who determines the new pension scheme?
Social partners (employee representatives and employers in your industry or at the company where you work) reach agreements on your pension. Among other things, they decide whether the defined contribution scheme will be flexible or based on solidarity, and how much money you contribute together with your employer. Social partners include for instance trade unions, works council and employer organizations. The employer and the TNO works council are the social partners at TNO Pension Fund.
Do I have a say in the new scheme?
Yes, you can make your voice heard through the social partners and/or employer organisations. Do you work at TNO Pension Fund? If so, you can make your voice heard through your employer and the TNO Works Council.
If you are retired or have accrued a pension with a pension fund in the past and your pension is still with this fund, you can exercise your ‘right to be heard’. That means letting social partners know what you think through an association – at TNO Pension Fund, it is eTNOs.
What will happen to my pension in the near future?
The employee representatives (TNO works council) and TNO are making agreements about your new pension scheme.
TNO Pension Fund is keeping track of your current pension entitlements. Based on the new agreements, they will convert that entitlement into assets that you have accrued for your pension. Legally, this conversion must be applied in a balanced manner for all participants, former participants, and pensioners.
Who decides what will happen to the pension that I have already accrued?
Social partners (employee representatives and employers in your industry or at the company where you work). At TNO Pension Fund, they are the employer and the TNO works council. They agree on whether your pension will stay where it is or be converted into capital for your pension under the new scheme.
I do not want to accrue a pension under the new scheme. Can I lodge an objection?
Unfortunately not. Everyone who is a member of a pension scheme will accrue pension through a new scheme. This has been laid down by law.
I do not want the pension I have already accrued to be converted into capital for retirement in the new scheme. Can I lodge an objection?
Unfortunately not. If the social partners (at TNO Pension Fund, they are the employer and the TNO works council) decide to convert the pensions already accrued, you are not entitled to object. This has been laid down by law. Bear in mind that you will not be losing your pension. It’s about converting the value of your pension.
In the new system, is it possible to exert influence on the investment policy? For example, exert influence to promote sustainable investments or exert influence by choosing a lifecycle?
In the solidarity premium scheme, you cannot choose a lifecycle yourself. There is a single collective investment policy which uses a lifecycle, derived from the risk appetite survey.
The pension fund board places great emphasis on sustainable or green investing – for more information, see the website of TNO Pension Fund. A participant can influence the ESG (environmental, social, governance) policy by taking part in periodic surveys on subjects such as ESG or customer satisfaction.
Costs: who’s paying for it all?
We’re currently unable to provide you with complete information regarding the costs involved in switching to the new pension system. As soon as we have more insight into the structure of the total costs, we will certainly let you know. We must remember that this change and associated costs are mainly the result of an amendment to the law. In addition, the costs for the TNO Pension Fund will weigh more heavily on the whole than, for example, for ABP, simply because ABP can divide the costs among many more participants.
Over the past three years, the pension accrual has been less than 1.75%. Will this be compensated?
In 2021, the pension accrual was 1.46%, while in 2022 and 2023 it was 1.50%. Employees have accrued less pension in these years compared with the aim of 1.75%. This cannot be compensated because we only have to look at the amount of pension that someone can still accrue in the current scheme compared with what will be accrued in the new scheme, so what happened in the past is not relevant.
The lower pension accrual was not a choice made by the pension fund, so the pension fund cannot compensate it. The reason for the lower pension accrual was the low interest rate. This meant that the premium the fund had to charge for TNO was too high according to legal rules. The pension premium has been historically high in recent years. To achieve the aim of 1.75%, an increase in the premium over the past three years of more than 3% of the wage bill would have been necessary. TNO and the Works Council decided, like many other employers, to implement a less sharp increase in the premium, and to accept a lower pension accrual.
The lower accrual due to low interest rates is one of the weaknesses of the current system. Due to the low interest rate, less indexation could be granted, which particularly affected pensioners. The same low interest rates were also the cause of the lower accrual in recent years. In the new scheme, the level of interest still plays an important role, but not to the extent it did in the current scheme. This is just one of the reasons why the new scheme is more future-proof.
What is going to change?
What will change under the new pension rules?
A lot will stay the same. Going forward, you will still be contributing towards your pension together with your employer. The pension fund invests this money, just like they do now, as simply saving money alone does not yield enough. It is still up to you to decide when you start taking your pension.
There is also a difference. As it stands, everyone gets the same amount of pension for the money that they contribute, regardless of whether that person is young or old. That is going to change. You will accrue capital for your pension. From the point in time that you start drawing your pension, the pension fund converts part of the money into a pension. The pension fund will show you how much you can expect to receive in pension benefits. There are already schemes that work like that. In the future, all schemes will work that way.
This may all seem like a big difference, with a great deal of uncertainty. But bear in mind that pensions are not guaranteed now either, and the funds are also being invested now. In the future, it will be clearer how much has been invested and what it will yield.
Apart from a pension for yourself, there will also be benefits for your partner and children when you die. If you are planning to retire soon, you can put aside part of your pension capital for a surviving dependant’s pension.
What are the pros and cons of these new rules?
Some will say that the new rules lead to a lot more uncertainty. But bear in mind that pensions are not guaranteed now either, and the funds are also being invested now. In some respects, the new rules are very different. The strong points will remain in place. That is how we can secure our pensions together.
In future, we will be getting our own pots for our pensions. Might that pot be empty at some point in time? Or might my pension evaporate, just like that?
No, the capital for your pension never ‘runs out’. You get a pension for as long as you live, even if you reach 120. Together, we make sure there are always pension benefits for those who are entitled to them or will be entitled to them in the future.
Does that mean I’ll soon be able to access my pension pot myself?
No, it doesn’t. Your pension assets will be used for lifelong pension payments. We will continue to manage it jointly via a pension fund. However, it will become clear what you have built up yourself and how much you and your employer have invested together.
Will the amount of my pension depend entirely on share prices at the time of my retirement?
No. The pension fund will make sure that the money for your pension is invested in such a way that the amount of your pension is as stable as possible when you retire.
In addition to this, there is a reserve for the solidarity-based scheme that can be used to compensate for fluctuations. That way, you won’t notice big changes to your pension benefits once you retire.
If you have a pension based on the flexible scheme, and you opt for a variable pension, then the level of your pension may depend more on stock exchange movements. Once it comes into effect, it may fluctuate more year on year.
Won’t the transition be very expensive?
Yes, the transition is expensive. That said, the pension funds do expect costs to be lower than they are now.
Could pension funds make a misjudgement? What happens then?
All pension funds in the Netherlands are preparing for this. The changes won’t be put in place all at the same time. The pension funds, including TNO Pension Fund, have to draw up a plan that sets out all the steps and lays down what the pension fund will do if something goes wrong. DNB (De Nederlandsche Bank) checks the plan. Various organizations will be keeping an eye on things to make sure things go as they should.
If you believe that an error hasn’t been resolved properly, you can lodge a complaint with TNO Pension Fund. If you believe that we failed to address an error properly even after handling the complaint, you can turn to an external independent dispute settlement authority. You can also take your case to the courts.
What will change regarding additional contributions to supplement my pension?
If you want to accrue extra capital for your pension, this depends more on your personal retirement wishes than the pension system. If, based on your pension accrual at TNO, you have determined that the final pension is not enough for your needs, it’s a good idea to make additional contributions through the fund or privately in order to supplement your pension. In the current system, you can choose a profile that selects specific investments. These individual investment choices will no longer be offered in the new scheme, as the principles of the solidarity scheme will also be applied to your additional contributions. The details of our solidarity scheme have not yet been finalized, so we will return to the options for making additional contributions to the new pension scheme at a later stage.
Will anything change in the current supplementary pension schemes?
The current TOP scheme (for those who participated in the period 01 Jan 1996 to 01 Jan 2006) and the Extra Pension Scheme will also have to be included in the fund's new pension scheme, and cannot continue to exist in this form in the new pension system. Options to transfer the capital in these two schemes to the new scheme are currently being looked at. This would mean that the capitals of these schemes would be added to the individual capitals in the new main scheme. An important argument for integration into the main scheme is to cap costs; maintaining a separate scheme is more complex under the new law, and therefore expensive. In the new situation, the costs for a separate scheme will have to be charged to the participants of the scheme in question. The costs per participant will therefore increase significantly.
The details of our solidarity scheme have not yet been finalized, so we will return to the options offered in the TOP scheme and additional savings via the Extra Pension in the fund's new pension scheme at a later stage.
Are the early retirement options still available in the new pension scheme?
As far as we currently know, all the current statutory and other options will continue to be available after the transition to the new pension system, including early retirement.
What will happen to the current indexation deficit?
In 2022 and 2023, we increased pension payments by almost 10% more than is strictly possible under current legislation. Unfortunately, this has not fully compensated the deficit that accumulated over the past 15 years. The maximum indexation deficit is still 9% for the oldest group of pensioners. This percentage is considerably lower for participants who accrued a pension over the past 15 years.
In the calculations that the fund has to carry out to compare the current scheme with the new scheme, the possibility of recuperating indexation will be included. In the new scheme, positive returns are distributed earlier. This is likely to make the new scheme more favourable for older participants compared to continuing the old scheme, including the possibility that the indexation deficit will be recuperated in the coming years.
How will capitals be converted during the transition to the new pension scheme?
The fund currently keeps track of how much pension must be paid out in the future for each participant. With a coverage ratio of 100%, the fund has exactly enough assets for all future pension payments When an individual joins the scheme, it is calculated how much the future individual pension payment is worth. This amount will be shown in the new scheme as the 'personal' capital. If the coverage ratio is high at the time of entry (e.g. more than 110%), each participant will receive a personal capital that is higher than the value of future pension payments.
Will anything change regarding the partner's pension?
Due to the legal amendments, the partner's pension will also change. In the case of death after retirement, virtually nothing will change. However, if death occurs before retirement age is reached, there will be significant changes. Under the current scheme, the amount of the survivor's pension and orphan's pension partly depends on the pension accrued until death, so it’s dependent on the number of years of employment. Under the new scheme, the survivor's and orphan's pension will only depend on the salary at the time of death of the employee. The length of employment no longer plays a role in the amount of the survivor's pension and orphan's pension. The employer and the TNO Works Council determine the desired level of the survivor's and orphan's pension.
In the new system, what is the effect of interest?
In the current system, interest has a significant impact on the coverage ratio, and the coverage ratio is decisive for increasing or decreasing pension entitlements and payments. As long as the coverage ratio remains above 104%, this will have no consequences on pension payments. However, you must maintain a high buffer to minimize the risk of payments decreasing. In the new system, there is no coverage ratio, and interest has a much more direct impact on the capital and therefore on payments. The new system also applies a reserve to limit reductions in payments. This reserve works more efficiently than the current buffer, so it can be much smaller. Protection against the impact of interest rate fluctuations can also be arranged much more efficiently in the new system by doing this per age bracket.
The law came into effect on 1 July 2023. Do I have to do anything?
You don’t need to do anything yourself to make sure your pension complies with the new pension rules. However, it’s important to check your contact details and update them if necessary. To do this, go to 'My pension' (top right of the TNO Pension Fund website) and log in with your DigiD.
Make sure all your details are correct. Check www.mijnpensioenoverzicht.nl to see if you have also accrued pension elsewhere, and check your details.
Can I choose to continue in the existing pension scheme?
No, you cannot choose that individually.
I’ve already retired. Do the changes also apply to me?
Yes, TNO Pension Fund’s social partners have decided to transfer the accrued pension entitlements and rights to the new scheme. The existing pension entitlements and pension rights will therefore be converted into 'personal pension assets'.
If you’ve built up another pension elsewhere, it depends on what the social partners of that pension fund have decided. If you have a pension with an insurer or premium pension institution, usually your pension will remain unchanged.
When will I find out how this affects me?
That depends on the agreements made by each pension fund. TNO Pension Fund shared the first insights in the October 2023 webinar. You can watch this webinar again (English subtitles). TNO Pension Fund is now working together with TNO and employee representatives (the TNO works council) to make further agreements and calculations regarding the new pension scheme. These agreements will be posted on our site no later than 2025. You will receive personal information about your pension from us at this time.
If you also have a pension with an insurer or premium pension institution through any previous employers, you will be notified as soon as a new scheme has been concluded. That will happen between now and 1 October 2026.
How will it affect me?
What is the difference between the two forthcoming schemes?
- Under the solidarity-based scheme, some of your capital is put aside for your pension. You compensate for windfalls and setbacks together.
- You also have capital for your pension under the flexible scheme. Often, you can decide how high risk the investment of the money should be. When you retire, you choose between stable and variable pension benefits.
Social partners (employee representatives and employers) decide which scheme they are going for.
What will happen to the pension that I have already accrued?
Social partners (employee representatives and employers) agree what will happen with accrued pensions. There are two options: the pension stays as it is. Or it is converted into capital for your pension under the new scheme. The pension fund then calculates what the value of your accrued pension is. That value is then transferred across to the new scheme. If the pension fund doesn’t have enough reserves or there is a shortfall, then the value of your pension falls slightly. If there are funds left over, then the money is shared. The way in which this is done depends on how much money is left over.
Do I gain or do I lose?
The pension fund will tell you how much pension you have accrued under the current scheme. You will also get a calculation of your pension under the new scheme. The ‘before’ and ‘after’ amounts may differ, but that doesn't say much about the pension benefits you will ultimately get. It is an estimate at that time.
What can I do if the amounts in my new pension scheme appear to be incorrect?
Contact your pension provider: AZL. They can answer your questions and provide explanations. If you’re still unhappy, you can lodge a complaint with the pension provider or submit a dispute to a special authority: the ‘Geschilleninstantie Pensioenfondsen’ (Pension Fund Disputes Authority). This authority has been providing binding advice from 1 January 2024, unless you opt for non-binding advice. You can also take your case to the courts.
What will my options be?
Many options remain the same:
- the time at which you start drawing your pension
- more pension initially and then a lower pension later on
- start taking some of your pension and the rest later
- convert the pension into additional benefits for your partner for when you die
If parliament passes the ‘lump sum’ bill, you will be able to have part of your pension paid out in one go when you retire.
Depending on the agreements reached about your pension, you may have two other options. If you accrue capital for your pension via the flexible scheme, you often have the option of having the money invested at higher or lower risk. And when you retire, you decide between stable and variable pension benefits.
Will my pension benefits go up faster under the new scheme?
Yes. Pension funds will not have to hold as much funds in reserve, which means that your pension may rise more quickly if the economy is doing well. Usually, your pension payout will only be changed, if at all, once a year.
Will my pension benefits decrease faster in the future?
Retired persons’ pensions, i.e. their pension benefits, will be kept as stable as possible. If you don’t yet get pension benefits, then the value of the investments may fluctuate. This may affect young people in particular. Pensions are expected to fluctuate less; this is because pension funds take good and bad years into account when calculating pensions.
Pension funds take fewer risks when investing as you get older, as they plan for your future pension to be as stable as possible when you retire.
Bear in mind that pensions fluctuate now, too, but that happens behind the scenes. Pension funds invest the money for your pension so that the amount can increase to the extent that you get a full pension later. The funds will never suddenly disappear, regardless of whether you are young or old.
When will my pension fund introduce the new scheme?
The new schemes will be introduced between 2025 and 2028. TNO Pension Fund aims to have the new schemes come into effect on 1 January 2026.
I would like take advantage of the lump sum option. That means that I will have a maximum of 10% of my pension paid out in one go when I retire. Is that possible under the new pension scheme?
Yes, that’s an option if parliament passes the ‘lump sum’ bill. The government is busy legislating for this option, so the details are still unclear.
Please note: taking a lump sum payment may have consequences for the supplement that you get, for instance, your rent supplement or care benefit. The supplement may be lower or may no longer apply. You also have to pay tax on it in one go.
I have already retired. Will I also switch to the new scheme?
Social partners (employee representatives and employers) will agree on whether your pension and the pensions of people still working will remain in place or be converted to the new scheme. Those still working will in any event accrue capital for their pensions under the new scheme. Your pension fund will inform you as soon as the agreements are known.
Do the new rules for pensions also affect state pensions (AOW)?
No. The new rules for pensions do not concern state pensions. It concerns the pension you accrue or have accrued through employment.
I get a partner’s pension. What will change for me?
It depends on the agreements that the social partners (employee representatives and employers) reach. We will inform you as soon as the agreements are known.
I get a disability pension. What will change for me?
It depends on the agreements that the social partners (employee representatives and employers) reach. We will inform you as soon as the agreements are known.
I live abroad, and that is where I get my pension benefits. What will change for me?
The pensions of people living abroad will not be treated any differently from those of people in the Netherlands.
What happens to your pension depends on the agreements that the social partners (employee representatives and employers) reach. We will inform you as soon as the agreements are known.
How do I prepare for the new pension scheme?
You don’t have to do anything. We will inform you if you have to do something.
If you would like to know more about the new pension scheme, please visit www.pensioenduidelijkheid.nl.
To whom do I submit my questions about the new pension scheme?
First check whether your question is on this page. If you can’t find the answer you’re looking for, please contact us.
Pensioners: what changes for pensioners?
The pension paid out in the first year will be at least as much as the amount paid out before the transition. Following this initial period, the amount of the payment will follow trends in the financial position of the fund more closely. If this is positive, pension payments can be quickly increased (indexation). In the event of a deterioration in the financial position, a decline can be prevented by a supplement from the solidarity reserve. In the event of an acute decline in the financial position, pension payments will be reduced. This can also happen in the current system.
Pensioners: will the pensions remain the same during the transition to the new pension scheme?
See the previous question.
Just before retirement: what happens if interest rates are high or low just before the new pension scheme is introduced? How will that work in practice?
And what happens in the new system if my capital declines sharply just before I retire?
This subject is being carefully studied by social partners and the board. We are exploring the possibilities of limiting the consequences of a decline in capital a few years before someone retires.
What is the situation with transferring pension rights?
Not much is changing in the relation to transferring pension rights. If you have accrued a pension at another fund, you can request a quote from our pension provider for the transfer of pension rights. You can also download the application forms from our website at www.pensioenfondstno.nl under ‘Documenten’. However, this does not necessarily mean that capital/pension will increase during the transition to the new system at Pension Fund TNO. Conversely, as a former participant, you can also transfer your pension to the fund where you are currently accruing pension. If you transfer pension rights, you do not take the current buffer with you to your new pension provider.
What does abolishing the average system mean?
In the current pension scheme, each employee annually accrues part of the future pension. The average system means that every employee pays the same premium for this for each euro of future pension, regardless of their age. In reality, the cost of a future pension is lower for young people than for older people, This means that too much premium is being paid by employees at the beginning of their career, and too little by employees at the end of their career. This averages out over the entire career.
Because this system is being abolished under the new law, employees will no longer benefit from a relatively low premium as they get older. The age at which the disadvantage becomes an advantage is between 45 and 50 years. This age group will suffer the maximum disadvantage from the abolition of the average system. The new pension law requires every pension fund to determine if the abolition of the average system in combination with the potential advantages of the new system will lead to a lower pension. If this is the case, the fund must indicate whether this will be compensated, and if so, how. One possibility is to use the available buffer of the fund at the time of transition to compensate those employees who suffer the greatest disadvantage. It is also possible that the employer will pay a higher premium for a number of years. No decision on this has been made yet.
Other
How likely do you think it is that the EU will arrange pensions centrally for the whole of Europe?
We don’t think it is very likely that the EU will arrange pensions centrally for all of the aspects. However, in recent years several initiatives have been launched that could result in regulations from Brussels concerning how pension funds should be governed. For instance, EU legislation came into force two years ago that requires pension funds to create separate risk management and actuarial supervision systems. There also has to be an independent audit function. We certainly don’t believe that this will have a negative impact. Key to this is that the enormous amount of money that Dutch pension funds collectively manage (around €1,500 billion) will remain in funds in the Netherlands and they will primarily remain under the supervision of De Nederlandsche Bank. We do not foresee a situation in which other countries will be able to directly influence pension funds in the Netherlands based on EU policies.
As a young person (<30), is there any point in worrying about your pension benefits when so much is likely to change?
Even for young people, it is sensible to ensure that you have the best possible idea of what your income will be when you retire. That is why we recommend looking carefully at your pension statement once a year. If there may be a shortfall in your pension, you should assess the options available to compensate for this shortfall.
What is the difference between a pension and capital?
When we refer to ‘pensions’ in our communications, we are generally talking about an annual amount that we will pay out from the time you retire and for as long as you live. When we refer to ‘capital’, we mean an amount used to purchase a pension on the retirement date, which we will pay out for as long as you live from that time forth.
Who exactly are the social partners?
Social partners are those who decide on the pension scheme. At the Netherlands Organisation for Applied Scientific Research (TNO) they are the TNO board and works council.
Under what conditions (in general sense) is it useful for older workers (55+) to accrue extra pension through Flexdirect under the current system, knowing that there will be a new system?
The conditions are the same for all members of staff. Depending on the person’s own situation, including their financial position, it may be advisable to be a member of the scheme. Given that the period of time to the retirement date is relatively short and the amount of the contribution is capped, being a member of this pension scheme will have a limited impact on the amount of the pension benefits ultimately received. If you would like to know more about your personal pension situation, check out the pension planner in ‘My pension’/’Mijn pensioen’ (log in using your DigiD) on www.pensioenfondstno.nl.
Given the earlier comments about paying too much pension when you are young and too little when you are old, am I to assume this is automatically bad news for everyone who is old?
In the current system, this is not bad news for everyone who is older because you are accruing a pension. The premium you pay for this is a flat-rate premium. So it is favourable for older employees (low premium for the amount you accrue in pension) and less favourable for younger employees (relatively high price for the amount they accrue in pension).
The new pension system seems to be more volatile and less secure compared with the old pension system. What is the advantage of the new pension system for me as a member?
Depending on the type of contract you choose, the new system offers more freedom of choice.
If you accrue capital in the new system, this can lead to problems. How do you address those problems? For instance, the retirement income that members can plan for is not clear to them. People may also think they have a lot of money because they don’t realize how much money is needed to pay out a pension for, say, twenty years.
As soon as the new system comes into effect, members will be informed differently from the way they are informed now. There will be tools that will give members good insights into the options. Obviously, it is unacceptable for people to be surprised by the level of their pension on the first day of their retirement.
What will happen to the pension that I have accrued up till now under the new system?
The way it is looking now, most pension funds are willing to convert previously accrued pension benefits in the new system. If they decide not to do so, then pension entitlements will still be subject to current laws and regulations. This is known as a ‘closed-end fund’. New accruals are then placed in a new fund. This has significant consequences for administration costs. The final parameters for conversion have yet to be worked out comprehensively and in detail. You will be informed about this as soon as there is more information.
I’ve heard that the Act will come into force in a couple of years’ time, but the new system will only come into effect in 2027. I will probably be retiring in 2027. Am I running a risk because this will be the first year of my retirement?
The legislation came into force on 1 July 2023. From that point onwards, pension funds have had the opportunity to switch to the new system. Ultimately, all funds will have to transfer to the new system by 2027. The transition to the new system will not present any additional risks for you.
If you have not accrued enough under the old system because you are young, how will this be handled during the transition to the new system?
Regarding possible compensation aspects, the board of TNO Pension Fund has not yet taken stock. Regarding the transition as a whole, it has to be balanced, and the board has to substantiate how the weighing of interests was carried out so that interests were balanced.
What about ‘saving additional pension’ in the new system? Is there anything to report in that respect?
The new system, too, will include the option of being able to contribute more.
Will the pension placed with an insurance company also transfer to the new pension system? Or does it only concern the pensions placed with funds?
If you have a supplement to your pension administered by an insurance company, then that will remain with the insurance company. The TNO Pension Fund pension scheme, as well as the Extra Pension, Net Pension Scheme and TOP capital will transfer to the new system.
How can a new pension system be less sensitive to low interest rates?
As it stands, the fund has to assess accrued pension benefits against the current market interest rate. When this interest rate is low, the fund has to hold much more funds than when interest rates are higher so that it ultimately has the funds required to pay out pensions from pensioners’ retirement dates onwards. In the new system, pension capital will only be accrued via lifecycles. Interest rates are then only a factor on the retirement date when the capital is converted into pension benefits.
How can the new plan be consistent with the ambition to have inflation-proof pensions?
In the new system, the pension target will be set and assessed periodically. It has been agreed in the pension agreement that the new pension system should offer the prospect of a pension with purchasing power sooner. Pensions are more likely to increase in good times, and fall in bad times.
How will accrued pensions be converted into capital when the new scheme comes into effect?
The final parameters for conversion of pension benefits already accrued under the current system to the new system have not yet been worked out comprehensively and in detail. As it stands, there will be two methods for this. You will be informed about this as soon as there is more information.
How will it work with the transition of the pension already accrued and the capital accumulation that will soon be accrued in the new system?
The way it is looking now, most pension funds are willing to convert previously accrued pension benefits in the new system. If they decide not to do so, then pension entitlements will still be subject to current laws and regulations. This is known as a ‘closed-end fund’. New accruals are then placed in a new fund. This has significant consequences for administration costs. The final parameters for conversion have yet to be worked out comprehensively and in detail. As it stands, there will be two methods for this. You will be informed about this as soon as there is more information.
I would like to have more control of my pension accrual. I am also accruing pension via pension savings schemes (also known as an ‘annuity’). In the future, will it be possible for me and my employer (TNO) to contribute as annuities instead of through TNO Pension Fund?
Compulsory membership will still be a key feature of the new pension system. This means that employees will be legally obliged to be a member of the pension scheme offered by the employer.
It has been stated that it is important that people can decide for themselves when and how they wish to retire. Does the system take into account those people deciding strategically when it comes to life expectancy? In other words, if I’m unhealthy, I may decide to retire early or opt for high or low benefits. If I do so, I will be drawing more out of the communal pot without me receiving the average amount had I not made that decision.
The actuary reports annually on the results of the impact that the options chosen have. In principle, taking advantage of the flexibility options is financed from your own pension.
Buffer: how will the current buffer of the TNO Pension Fund be distributed?
We maintain a larger buffer in the current pension system, mainly to protect the pension rights of young people. In the new system, the buffer will consist of two reserves and be much smaller. In addition to a small mandatory reserve (approx. 2%), the fund will maintain a solidarity reserve in the solidarity scheme. The exact details of this reserve depend on the final agreements. If any of the current buffer is left over after being used for these new reserves, it will be distributed once (added to individual capitals) on the basis of distribution and priority rules which will be determined at some point in the future.
Buffer: how large is the new pension scheme’s buffer/reserve? How will the reserves be filled and distributed?
Combined, the new reserves will be much smaller than in the current system. Legally, the solidarity reserve may reach 15%, but for the time being, we’re assuming a maximum of half of this. The reserves can be filled in various ways. In addition to using the current buffer when the new scheme is introduced, the solidarity reserve can be filled from the premium and the return. For now, we assume that the reserves will be filled based on the returns of all participants.
Pensioners: what if my pension pot runs out?
If you live longer than the fund took into account, your pension benefit will be supplemented from the solidarity reserve. In the new system, our pension continues to be paid out for life.
Pensioners and capital: will my capital be calculated according to legal rules, and will the pension payment and the stabilization of this payment from the solidarity reserve be the priority?
Administration is based on the individual capital of all participants, including pensioners. The pension fund will make sure that the money for your pension is invested in a way that ensures that the amount of your pension is as stable as possible when you retire. For pensioners, communications will emphasize the amount of the pension payment, as this is much more important for pensioners. In addition to the individual capital, the supplement from the solidarity reserve is important for the amount of pension paid out. The solidarity reserve is used, for example, if you live longer than the expected age (pension has to be paid for life), or if the personal capital decreases due to poor financial returns.