2023-07-01 05:20:30
After twenty years of pleadings, a new pension system is finally being introduced today. We all receive personal pots and pensions change faster on the basis of investment results. But it is still a transitional phase. Step by step, everyone ends up in the new pension pot.
The new pension system will take effect on 1 July, but there will be a transitional phase until early 2028. The current pension is therefore not immediately put into millions of personal pots. Much will happen in the coming years.
“As of today, professionals at pension funds are busy with how your pension is transferred to the new system, and that also applies to the works council and the HR department at your work,” says pension lawyer Theo Gommer.
“They must ensure that each pension fund has a transition plan before 2025. This includes when exactly the move will take place (in 2026, 2027 or 2028), how this will be done and what type of arrangement will be chosen. There is only one and a half year to go, and with summer and Christmas in mind, there’s no time to lose.”
It is important for pension accruing employees to keep a close eye on all this, says Gommer. “Then at least you understand what is happening. It’s regarding your deferred salary. So also ask everything you don’t understand.”
What is yet to happen
Pension funds must make a choice between two schemes on the basis of consultation between employers and employees. One where you expressly share investment risks with all of you and one where you as an employee have a little more choice regarding how you invest.
Gommer expects that for the time being the solidarity scheme will mainly be chosen in industry-wide pension funds. For company pension funds (pension funds of one company) this will more often be for the pension scheme with more individual choice.
More pension in your new pot
Before 2025, you will also hear how the transfer of accrued pension (also known as entering) works and what this means for you. Instead of now having an entitlement to part of the total pension pot, that pot will soon be divided into all personal pots.
“In the coming period you will hear regarding how this will work out, including whether you have more pension accrual in the new system. It is expected that employees will find 5 to 10 percent extra accrual in their pots, because pension funds in the new system maintain buffers,” says Gommer.
The fact that a smaller buffer is maintained does mean that your pension will rise slightly more quickly if you have good investment results and that your pension will be reduced a little more quickly if the stock market is poor.
How people in their forties are compensated
When moving and distributing the pension pot, a group of people in their forties in particular may lose out somewhat. This is because they paid a slightly too high pension contribution in the old system as young people. Due to the system change, they no longer benefit from a slightly too low pension premium later in life. They will be compensated for this during the transition to the new system.
Pension funds will announce towards 2025 how that compensation will be calculated. However, the amount can still change depending on interest rates at the time of the actual move.
Pension increases next year more modest
In the coming years, most people will still be in the old pension, with pensions being adjusted as much as possible on the basis of price increases. Last winter, pensions sometimes went up by more than 10 percent.
Gommer expects more modest increases of 3 to 5 percent next year. “Because inflation is less high than last winter, but also because pension funds are a little more careful with their buffers towards the transition to the new system.”
Check your details with your pension fund
In the coming years, it will be a good idea to check whether your pension fund has the correct information. “Think regarding your name, the date of your employment or your divorce,” says Gommer. “Previous research shows that 20 percent of people have an error in the information. It is more convenient if everything is correct before you move to the new pension. And by investing some extra time in your pension, you will soon know better what awaits you.”
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