What you need to know about the pension agreement
It has been talked about for more than ten years, now it is coming: a new pension system. Last Friday, the FNV approved the details of the pension agreement. "This is absolutely historical," says AObpension adviser Roelf van der Ploeg who answers the most pressing questions.
All teaching staff - along with millions of other employees - will have to deal with the new rules that will apply to retirement. In June 2019, the unions, employers' organizations and Minister Wouter Koolmees of Social Affairs reached a pension deal. It is an outline agreement in which the main goals for the new system are described. These are: a slower rise in the state pension age, employees who carry out a demanding profession must be able to retire more quickly without fines and there will be new rules for pension funds where employees are paid the supplementary pension.
The FNV recently approved the details of the pension agreement. Is that different from the 2019 pension agreement?
“After the pension agreement was concluded in 2019, the parties had to work out the agreements in more detail. This has been discussed for a long time and it has now been completed. This elaboration mainly concerned the new pension contract for the supplementary pension. Teaching staff receive that pension from the ABP pension fund - to which the teaching staff are affiliated. ”
Why did the pension have to be overhauled?
“The labor market has changed. The days of working in one sector for life are over. People switch between jobs or are self-employed for a while. In addition, we are getting older, which makes pensions unaffordable. ”
What are the biggest changes?
“We say goodbye to hard promises. Pension funds therefore do not guarantee that you will receive 1000 euros per month when you retire. That will be a goal. You can see what the assets of the pension fund are, what money has been reserved for you and the expected benefit. The amount will depend on returns from investments. So you can see more directly whether things are going well or badly.
In addition, the 'uniform premium' will disappear. Now everyone within a sector pays the same premium and everyone accrues the same pension. In the new system, employees will continue to pay the same premium and the premium will be allocated to the personal share in the pension assets. The money from young people can pay off for longer and is therefore expected to yield a higher pension. ”
Sounds like it is getting more insecure?
“Everyone prefers to have certainty, but even with the guarantees that pension funds now provide, there is no real certainty in practice. Look at the imminent discounts at ABP. Do you want a guaranteed low pension or an uncertain high pension? In the new system there is a certain degree of certainty because you can see what has been saved for you. That will not evaporate in one go, pension funds will continue to invest based on their obligations and their participant population. ”
What are the advantages?
“The system was trapped in strict rules associated with hard pension promises. Because pension funds no longer provide guarantees, funding ratios - the money that pension funds now need to have in cash to pay for pensions in the future - will become the dominant factor. Just like strict rules about interest rates. Pension funds can therefore distribute money more easily and sooner if things go well. But also faster cuts in bad times. What pensioners notice immediately is that they will not be cut or will be cut less next year. This was a promise from Minister Koolmees. ”
What does the AOb of it?
“The FNV - where the AOb part of is - sat at the table in the negotiations about the pension. Last year, a majority of the AOb-members in a referendum the pension deal is generally good. Now the FNV member parliament has approved the effect, in this parliament the AOb eight seats. Also the General Assembly of the AOb discussed it and agreed with the effect. ”
Does the new pension harm employees between the ages of 35 and 55, as is circulating?
“Due to the abolition of the uniform contribution rate (see question above), age groups no longer accrue the same pension as is currently the case. Young people's money can pay off for longer and is therefore likely to lead to a higher pension. Only the current group has not yet benefited from this agreement and therefore not yet a higher accrual. Nevertheless, the abolition seems to be better than expected, because it will be offset from the profits of the new system. As calculations now show, this group also receives a better pension than in the old system, although that depends on the returns that pension funds achieve. However, it has been clearly agreed between the parties that if this is not the case, this group will still receive compensation. ”
How are things going now and when will I notice the agreements?
“Minister Koolmees now has to get started with the legislation and the House has yet to approve. The parties are expected to agree, the entire coalition is for and probably also the PvdA and GroenLinks. The legislation is expected to be ready in 2022. Then it is the turn of the pension funds. They will have until 2026 to enter everything. It requires an enormous conversion of tangle of arrangements. It takes time."
I am 60 years old, is it useful to quickly retire now?
“No, this is not necessary. Everyone is coming along to the new system: workers and pensioners. It is stated in the agreements that no one should go forwards or backwards. If you want to retire, you should do that, but you will no longer benefit if you do this earlier now. ”