Agreement on new ABP pension scheme
There has been an agreement on the main points for a new pension scheme at the ABP pension fund. The agreement is necessary because of the new Pension Act, which means that pension funds will have to deal with new rules.
Picture: Type tank
“It was a huge job, but I am happy that we are achieving a plus for all groups,” says AObpension adviser Roelf van der Ploeg.
The agreements were made by the Pension Chamber of the ABP pension fund, the largest pension fund in the Netherlands to which educational staff and government employees are affiliated. The Pension Chamber contains the unions and employers. The new pension scheme will apply to 1 million participants as of January 2027, 3, and the ABP pot contains approximately 470 billion euros.
New system
The new Pension Act - which was introduced in 2019 and passed in May this year the Senate has passed- ensures that pension funds no longer provide guarantees for the monthly pension amount if you stop working. Everyone gets their own pension pot and the amount of the pension now depends on the returns from investments. Pension funds can therefore increase pensions more quickly when things are going well and are no longer subject to the strike rules surrounding discount rates and funding ratios. They can also make cuts earlier in bad times.
Another important change is the disappearance of the 'average premium'. In the old system, everyone paid the same premium and accrued the same pension. Employees now continue to pay the same premium, but that premium money goes to their personal share in the pension assets. Young people's money can yield a longer return and will yield a higher pension. A new pension system is necessary because of the changing labor market, where employees are no longer always employed by one employer, and the higher life expectancy. Together we achieve more! Join the AOb
Van der Ploeg negotiated the new pension scheme at ABP this year. “This agreement is an elaboration of that. It is clear what the new arrangement looks like and also what we do during the transition to the new arrangement.” The starting point was to maintain a 'pension with purchasing power' for all ABP participants. That is according to the AOb-pension advisor succeeded. “No one will lose out under normal economic scenarios.”
No one will lose out under normal economic scenarios
Compensation
The unions ensured compensation for employees between the ages of 45 and 65. “This group might otherwise have suffered in the new system due to the abolition of the average premium. We want to prevent 'bad luck and good luck generations'. That worked."
The unions provided compensation for employees between the ages of 45 and 65
Furthermore, the agreement about the survivor's pension before the retirement date is striking. “If the insured person dies, the surviving relative will receive 41 percent of the last salary on the account every month,” says the AOb-pension advisor. “Children who remain behind also receive 25 percent of their final salary until the age of 7.” The lowest incomes benefit most from this agreement. But this is also a better arrangement for middle incomes, but it remains the same for the very highest incomes.
Surviving relatives currently receive a lot less, because the calculation is made on the basis of the pension to be achieved and not on the final salary. "The pension amount - including AOW - is already about 70 percent of the salary. With an income of 35 thousand euros, this means that the survivor's pension is calculated over 20 thousand euros. The pension that can be achieved is then 14 thousand euros. The survivor's pension for AOW age will then be just under 10 euros. In the new scheme, the survivor's pension will be 41 percent of 35 euros. Survivors will then receive 14.350 euros. A significant improvement compared to the current scheme."
The survivor's pension is a lot better than the current scheme
Solidarity
The new pension scheme also includes a solidarity pot. “We thought this was important, because you don't want to make cuts immediately when the economy is getting worse,” says Van der Ploeg. "With this reserve we also insure the risk if we all live longer than our life expectancy. If the stock market collapses, this pot also contains a buffer for working people."
The new pension premium will be 27,2 percent from January 1, 2027. The premium is currently 27 percent. The distribution between employers (70 percent) and employees (30 percent) remains the same. Furthermore, it will be possible to make additional agreements about the pension scheme in the education collective labor agreements.
Agree
This is an agreement on the main points. The parties hope to have a detailed version with all details by the end of February 2024, which is also mandatory under the new law. The unions will submit this version to pensioners' associations at the end of March, in accordance with the law. “A final agreement must be reached in April,” says Van der Ploeg. “All constituencies can vote on this.”
AObmembers will then receive an email. “We hope that it will be final before the summer of 2024, so that ABP can prepare for the introduction and the Dutch Bank has time to test whether the agreements meet all legal requirements. Naturally, the accountability body of ABP - the participation council of the pension fund - also gives an opinion on the agreements.”
Curious about all agreements and details? Download the agreement
