New pension scheme: this is how we prevent unlucky people
The ABP pension has become very complicated over time due to the accumulation of different schemes. The new pension scheme should simplify this. There are groups of participants that need to be compensated.
Picture: Type tank
Take the disability pension, which at ABP consists of a range of different schemes. This has grown due to the change from the WAO to the WIA in 2006 and further adjustments in 2018. “As a result, there are now three groups with their own rights, based on different rules,” says AOblawyer Rick Goldschmitz. “The intention is to simplify this during the transition to the new pension system. But of course those previous claims must be safeguarded.”
From 2027, everyone will have the same rights, which will be much clearer. The current main rule for the disability pension will remain in effect. What does that one look like? After two years of illness, you will receive a benefit from the government organization UWV, namely the wia. If you are completely disabled, this amounts to approximately 70 percent of your basic salary (i.e. without allowances). You will also receive a supplement from the ABP of another 10 percent, which is your disability pension. This adds up to around 80 percent of your basic salary. The ABP calculates a maximum salary of approximately € 75.000, but that does not matter in practice: the ABP supplements the benefit if you earn more. This is how it will soon work in the new pension scheme.
Surcharge pro rata
What makes it difficult are the deviating arrangements that are still in place at ABP. A group of people who are currently incapacitated for work would suffer if the main rule were introduced for everyone. These people will receive an allowance from 2027. The underlying regulations will be abolished.
And what happens to that compensation if you can start working more over time? The surcharge will then decrease pro rata. For example, suppose you are half incapacitated for work and that becomes a quarter, then the allowance will be halved. But if you become completely incapacitated for work, the allowance will not increase. In this situation, you are covered by the main rule for that extra part, which applies to everyone from 2027.
The aim is equal pensions
A similar approach will be introduced for ABP participants who will receive some extra pension for the years before 1995. This scheme will also be scrapped, with compensation for the people who will miss this allowance. It works like this: because ABP used to assume the traditional family with one breadwinner, both single people and participants with a working partner accrued too little pension. This was already repaired in the 1996s, but was only formally recorded in 1995, when the ABP was privatized. Both groups receive a maximum of €107 extra pension per year for each year they worked before XNUMX. This can create a somewhat strange situation, slightly AObpolicy officer Roelf van der Ploeg. “If your partner did not work and now dies, you are suddenly single and you get that extra amount. If your partner worked, that allowance will no longer apply, but you will receive the single allowance in return. These are complicated and somewhat uncomfortable arrangements. That's why we're abolishing them both. From now on, you keep what you already had before your partner died.” The amount that ABP reserves for these allowances is distributed among all pensioners.
These are complicated and somewhat uncomfortable arrangements. That's why we're abolishing them both. From now on, you keep what you already had before your partner died
People who have not yet retired will receive compensation for the expiration of benefits. The amount depends not only on the number of years of work before 1995, but also on the impact on your total pension benefit. Suppose you are now 64 years old and you have completed twenty years of service before 1995. Then you could now receive 20 times € 107 equals € 2.140 extra pension per year. With a low income, this can be a significant part of your pension. This group will still receive a large part of this amount, while people with high incomes will receive less compensation. Van der Ploeg: “Low incomes receive relatively more. In this way, we want to maintain the objective of equal pensions as much as possible.”
Low income earners receive relatively more. In this way, we want to maintain the objective of equal pensions as much as possible
Own pot
And then there is a big job for all Dutch pension funds: compensating people in their forties and fifties for the abolition of the current average system. This group would suffer greatly if the new pension scheme were simply introduced. What's that again? At the moment, everyone pays the same amount of pension premium and accrues the same amount of pension per euro of contribution, this is the average system. So it doesn't matter what age you are.
That's going to change. Soon you will pay the same premium, but the money will go into your own pot. For a younger participant, a euro will then yield a longer return and can be invested in a riskier manner. If you are close to retirement, invest conservatively to keep the benefit as stable as possible.
Between shore and ship
At the moment, as a young person you actually pay too much for what you build up, while as an older person you pay too little. As soon as the new scheme comes into effect, young people will immediately benefit from it and quickly catch up. The older group has already built up a substantial pension. It is precisely the group of people in their forties and fifties who fall through the cracks. They have built up too little in their younger years and will no longer benefit from the current advantage of older people. “We will compensate that difference for everyone over the age of forty, they will receive a lump sum. All generations must benefit equally from the new system,” said lawyer Goldschmitz. This compensation applies to all participants aged forty and over, but the amount is descending.
All generations must benefit equally from the new system
It allocates 3 percent of its capital for this operation. One risk: this is only possible if the coverage ratio is 107 percent or higher. This indicator indicates whether there is enough money in hand to meet future pension benefits. If the coverage ratio is too low, the compensation budget must come from additional premiums to be paid. A small part of this will also go to the solidarity reserve, which, for example, benefits pensioners in the event of a bad investment year. The coverage ratio is currently approximately 114 percent.
The result of all these figures should be that all participants will ultimately receive approximately 2 percent more pension income, according to policy officer Van der Ploeg. “Only current retirees are making slightly less progress, but fortunately they have already benefited from the adjusted rules regarding indexation.” These rules have been relaxed in the run-up to the new pension system. Last year it was able to increase pensions by almost 12 percent. Given the intense inflation, that was a good thing.
Vote!
There have been intensive negotiations about the new pension scheme. The agreements that employee and employer organizations have made are included in the draft transition plan. You can find that on the website of the . Members of the FNV can vote on the results until May 15. Also AOb-members have received a voting invitation by email. Do you not have a voting call but are you a member? Go to the FNV website.
