After the House of Representatives, the Senate also approved the Future Pensions Act (Wtp) on 30 May 2023. The new law came into effect on 1 July 2023. Pension schemes must comply with this new law by 1 January 2028 at the latest. These are the three goals of this new pension law: pensions through a job move with the economy (can rise faster, but also fall), pension accumulation is more personal and clearer, and it better aligns with people changing jobs more often or starting for themselves. Pension is income after someone has retired. In addition to the pension through a job, there is AOW: the pension from the government. This remains the same.
Milestone
Social partners (employer and employee associations) in the accommodation recreation, swimming pools, and swimming schools sectors had been preparing for possible adjustments and exploratory discussions for some time. To work together and in collaboration with the Pension Fund Recreation on how the new pension scheme will look. Social partners have reached a preliminary agreement on this. We are one of the first sectors in the Netherlands to have come this far. The new pension scheme as of 1-1-2025 is an important milestone for social partners. This elaboration of agreements aims to provide a stable and future-proof pension for all participants in our sectors. Before it becomes final, the social partners consult their members. FNV Recreation offers the negotiation result with a positive recommendation. During the extra sector council meeting on Wednesday 11 October, we presented this, and they agreed.
Sectors' needs are central
The collaboration between social partners has led to a new pension scheme specifically tailored to the needs of the accommodation recreation and swimming pools sector. Consideration is given to the characteristics of these sectors, such as many young participants.
Solidarity remains important
In the new pension scheme, you get a personal pension capital. This pension capital is built up by the contributions you make, together with your employer, and by the return (which is the result) achieved by investing that capital. In the new pension scheme, it is clearer to see how much pension capital you are building up and what that means for your pension income later after retirement. At the same time, there are still solidarity and collective elements: whether you are young, old, or in between. You share risks with each other, such as disability or death. Risk-sharing should ensure a stable, understandable, and fair pension.
Protecting pension payments against fluctuations
As the pension date approaches, the investment risk is reduced. Young people can take more risks because they have more time to recover from any setbacks. To protect retirees' pension payments, there is a solidarity reserve. It acts as a buffer to ensure that retirees continue to receive a stable pension as much as possible, even if the return on investments is disappointing.
Strong points remain
Not everything changes. The strong points of the Updates rules for pensions in the Netherlands remain.
- You build up a pension through your employer. That remains the same.
- You receive a pension as long as you live.
- In addition to a pension, you will later receive AOW from the government. That remains the same.
- If you die, your partner often receives a pension. Even if you die before you retire.
- You also continue to build up a pension if you become disabled.
- You can also start your pension earlier. Just like a number of other choices, such as choosing only an old-age pension at the pension date or a slightly lower old-age pension and a slightly higher partner pension.
What does change? The main changes
Starting to build up earlier
As of 1-1-2024, pension accumulation legally starts at 18 years old. Due to this legislative change, the minimum age for participation in a pension scheme is lowered from 21 years to 18 years as of 1 January 2024. This legislation affects all pension funds in the Netherlands and certainly also our sectors. Young employees aged 18, 19, or 20 will start building up their pensions from 1 January 2024. Employers will also pay contributions for these young employees. Since the retirement age remains 68 years, these young people will therefore build up a pension over more years than now.
Pension with agreements about contributions, no promise about the amount in advance
Under the new pension rules, pension funds must adopt a contribution scheme. In this, no agreements are made about the payment, but about the contribution. However, social partners determine the level of the contribution concerning their ambition. This is still determined in your CLA. The amount of your personal pension pot depends on the result achieved by investing the contribution. Retirees receive a lifelong pension based on the accumulated pension capital. For our sectors, the Updates contribution of 21.8% remains leading and will not change for the time being as a result of the new rules.
You build up a pension capital
The contributions made are invested. Investments are made according to the investment policy set by the board of the Pension Fund Recreation. You cannot choose where to invest or determine the risks yourself. Pension Fund Recreation invests all contributions collectively. By investing, you receive a return on your contributions. This is how your pension capital grows. This already happens in the Updates system. In the future, you will be able to see better how much money the employer and employee contribute and how it grows.
Pension moves with the economy
If the economy is doing well, your pension can rise faster. But your pension can also decrease if the economy worsens. The younger you are, the more your pension capital will move with the economy. That's not a problem because you also have more time to build up a pension capital and make up for any setbacks. If you are retired, the pension moves as little as possible. But your pension can change a little every year. It is expected that pensions will rise more often and sooner than now.
Reserve
The principle of solidarity and the idea that we all take care of each other is traditional. In the new pension scheme, everyone has their own personal pension capital, and there will also be a mandatory reserve. This is a collective reserve with which financial ups and downs can be shared together. The reserve is used to supplement pension capitals or payments in the event of major setbacks and to spread risks. This prevents unlucky and lucky generations and is expected to keep large fluctuations in pensions out. In addition to the reserve, the board of Pension Fund Recreation has instruments in the new scheme to mitigate or spread negative effects over time. This prevents economic setbacks from having a direct major impact on pensions.
Personal pension capital cannot run out
When you are retired, we pay your pension monthly from your pension capital. That capital cannot run out. You always receive a pension, no matter how old you get. If you live longer than expected, we will supplement your pension capital. The money comes partly from people who died earlier than expected.
Survivor's pension: now standard arranged
The survivor's pension is arranged in the event of death before the pension date and in the event of death after the pension date. In the new scheme, the amount of the partner's pension in the event of death before the pension date depends on the salary. The partner then receives a lifelong payment of 10% of the salary.
In the Updates scheme, the amount of the partner's pension in the event of death before the pension date depends on the salary and the number of years of service (the number of years between the date of employment and the pension date). For people with few years of service, this is an improvement.
In the event of death after the pension date, the amount of the partner's pension mainly depends on the pension capital you have built up on your pension date and the choice you make for the distribution of your capital over an old-age and partner's pension. By default, the amount of the partner's pension in the event of death after the pension date is 70% of the old-age pension, but you can choose a different percentage. Your partner must co-sign for this.
The orphan's pension in the new scheme in the event of death before the pension date is 5% of the salary (doubled for full orphans), in the Updates scheme this depends on the salary and the number of years of service. In the event of death after the pension date, the orphan's pension is a fixed percentage of the partner's pension after the pension date. (and therefore depends on, among other things, the accumulated pension capital). The orphan's pension is paid until the 25th birthday.
Finally, there is the voluntary ANW gap insurance, a supplement to the partner's pension. This remains unchanged. The amount is a fixed amount, based on the statutory Anw benefit. The benefit is temporary and runs until the partner's AOW age. This remains unchanged.
Transition: converting from Updates to new
All pensions of working people and all commenced pensions are converted into personal pension capitals. It is a choice of social partners to do this and thus follow the so-called standard option from the law. Choosing to convert based on the legal standard rule is generally in the interest of the participants. This keeps the pension built up from the Updates scheme and the pension capital in the new pension scheme together and keeps the payment of that pension executed from the same organisation. This is more advantageous than two administrations side by side.
Buffers have been built up with the Updates pension capital. Part of this is used for the (initial) filling of reserves in the new pension scheme. The rest of those buffers becomes available for distribution to the personal pension capitals. Because all three reserves are immediately filled, they all work immediately. It concerns the following reserves:
1. Minimum required own funds: a legal obligation.
2. Operational reserve: financial safety net for absorbing unexpected setbacks.
3. Solidarity reserve: intended to protect the level of pension payments.
Compensation where necessary
The introduction of the new scheme may have adverse consequences for some groups of participants. There is a group that paid a relatively high contribution in the first years but no longer benefits from the advantages of this in later years due to the new system. For some groups, these effects offset each other or are even expected to lead to a positive outcome. For the youngest participants, the positive effect of more money for their contribution in the new scheme is expected to outweigh the negative effect of conversion. But in between, we expect a group of active participants, especially those older than 47 years, for whom the negative effects are greater than the positive effects of conversion. They are therefore expected to be disadvantaged in the new scheme. For this group, compensation applies. If sufficient capital is available, they will therefore receive compensation. This compensates for these consequences.
Pension in the Netherlands, how does it work again?
The pension in the Netherlands consists of three pillars:
- The so-called basic pension, better known as AOW. Every Dutch person who lives or has lived in the Netherlands and reaches the AOW age receives this basic pension from the government. Even if you have never worked. The amount depends on how long you have lived in the Netherlands and whether you live together or alone. At the moment, the amount of the AOW for a cohabiting person is €920.98 net and for a single person €1,353.11.
- If you work in the recreation sector or swimming pools sector, you build up an old-age pension through your employer. This is also the case in many other sectors. During your working life, you and your employer pay a contribution every month – this is done automatically through your salary payment. This goes into the collective pension capital of the sector, which is Pension Fund Recreation. Pension Fund Recreation invests the collective pension capital. This leads to returns that are added to the collective capital. This becomes more valuable due to positive results. In this way, you build up a pension that you receive from your retirement age, on top of the AOW. This pension amount varies per person.
- It is also possible to provide for an additional pension yourself. This does not go through your employer, but for example through an individual pension insurance. This can be wise if you foresee that you will not have enough after your retirement date with the AOW and the pension via Pension Fund Recreation. In addition, there are two possible extra ways to build up a retirement provision. A house of your own is one of them, because it builds up capital that you can use later. Finally, working after the retirement date is also a way to obtain extra income. This is not a pension, but it is extra capital for the retirement provision.
The new pension rules concern that second pillar: the pension that is built up through employers at Pension Fund Recreation.
More information
Go to the theme page on www.pensioenfondsrecreatie. On 27 September, a webinar took place about the new pension rules. You can easily watch this webinar again.