What happens to the survivor's pension?
The new pension system also changes the survivor's pension. It is mainly about improvements, as is evident from the provisional agreement between trade unions, employers and ABP.
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They look quite favourable, the provisional agreements on the survivor's pension. This is the pension that your partner will receive if you die earlier. There were intensive negotiations about this at the end of last year by trade unions, employers and the ABP.
The biggest change concerns the survivor's pension in the event of death before the state pension age. That will be risk insurance. In the current system, this benefit is higher the more years you have been affiliated with the pension fund. That is changing: the amount of the survivor's pension will depend purely on the income upon death. So it no longer matters how long you have been employed and how much pension you have accrued.
An example. Suppose you start teaching at the age of 45 and die shortly afterwards. In the current situation, your partner will receive a survivor's pension on the ABP pension that you would accrue from the age of 45 until your retirement. That amounts to about twenty years. This would mean that your partner would receive approximately half of the survivor's pension if you compare it with the survivor of someone who was already with the ABP in their twenties. That difference will soon no longer be there. When the new scheme comes into effect, ABP aims for January 1, 2027, your partner can in any case count on 41 percent of your last-earned salary. On average, that is more than now.
A big plus
“The transition to insurance is a big plus,” says policy officer and negotiator Roelf van der Ploeg AOb. “The surviving relatives of lower incomes in particular are making significant progress.” An example. Suppose you are now building up a pension of € 10.000 and you die before state pension age. Then your partner gets 70 percent of that, which amounts to just under €600 per month. Under the new system, your partner will receive 41 percent of your monthly salary, which amounts to approximately € 2.700. That means an amount of approximately € 1.100 per month, a significant difference.
The surviving relatives of lower incomes in particular are making significant progress
This change is less favorable for one group, namely singles. They will soon pay the insurance premium for the survivor's pension for nothing. If they die before the state pension age, there is no partner. “A bit like taking out fire insurance without owning your own home,” says Van der Ploeg. Fortunately, there is a possible advantage if this single person does reach the state pension age, which will happen soon.
Repair in case of disability
First, a good result that the negotiating partners have achieved. This concerns early death while you are incapacitated for work. In this situation, you will only accrue 50 percent of your retirement pension. If you then die before state pension age, your partner will only receive half of the survivor's pension. This is being repaired: with the new scheme, the surviving relative will receive the full amount. “The current rules in this situation cause a dramatic drop in income,” says Van der Ploeg. “I am proud that we are going to restore this.”
In this situation, the current rules cause a dramatic drop in income
Death after retirement
What will the survivor's pension look like in the event of death after the state pension age? That's a simpler story: just like now, it amounts to 70 percent of your old-age pension. With effect from the new system, that pension will become your own pot, and the amount you accrue may fluctuate more. But with a safe investment mix, with a lot of government loans, by the time you retire, you ultimately know exactly where you stand. “On average, people are improving with this new system, and this also applies to surviving relatives,” says Van der Ploeg.
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When you retire, you can choose to adjust the survivor's pension. For example, you can increase it slightly with part of your retirement pension. That would be an idea if you have a young partner while your life expectancy is low. It is also possible to reduce the survivor's pension or forgo it altogether, for example if your partner has already built up a generous pension. However, your partner must agree to this. You then exchange (part of) the survivor's pension for more retirement pension.
For singles, this exchange happens automatically when they reach retirement age. And now the promised benefit for this group: this exchange currently only applies to survivor's pension accrued after 1999. In the new system, this restriction will no longer apply, which means extra old-age pension.
Additional costs
The adjustments to the survivor's pension look favorable, but they do cost some extra pension premium. This is a total of 0,3 percentage points (on the total premium of 27,2 percent of the pensionable income). Van der Ploeg: “That is a conscious choice, so the scheme benefits everyone. Otherwise, groups would also suffer in the new system. We don't want that. Relatives are already in a sad situation, so you want to take good care of them.”
Orphan's pension is improving
The orphan's pension will improve on two points in the new pension system. To start with, children receive benefits for longer when a parent dies, namely until the age of 25 instead of until the age of 21, as is the case now. It has now been agreed that all children who have not yet reached the age of 1 on January 2027, 21 (when the new ABP scheme comes into effect) are entitled to that longer orphan's pension. Second advantage: from now on all children will receive the orphan's pension, while currently there is a maximum of three. If one of the parents has died, the benefit per child is 7 percent of the salary; both his parents died at double the rate. How long you have been employed does not matter with the orphan's pension.
