January 15, 2021

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The pension may rise faster in the coming years Financially

The pension may rise faster in the coming years Financially

The threshold for indexing retirement provision is falling. The same applies to the cutback limit, which is always a real danger for large pension funds.

This emerges from the plan for the transition to the new pension system that Minister Koolmees (Social Affairs) presented on Wednesday.

The funds must be transferred to the new system by 2026, in which pensions must also be increased more quickly.

The unions wanted these more flexible rules for indexing to apply during the transition to the new system. And Koolmees has now provided space for that.

The funds will soon be able to increase the pension with a financing rate of 105%. So if for every euro of the promised pension € 1.05 is available in cash. This limit is now still at 110%.

It is well known that the titmouse also takes decisive action to avoid discounts. At the end of this year, the funds will only have to cut their pensions if the coverage ratio is below 90%. This limit also applies at the end of 2021.

After that, the limit is 95%, but there are exceptions. A fund that is below 95% but can come up with a plan in which it can grow to that limit in subsequent years does not need to make any cuts.

For many retirees, however, the chance of a reduction is much greater than the chance of an increase. The two largest funds for civil servants and teachers (ABP) and for health workers (PFZW) exceeded the 90% mark at the end of November.

With a slight headwind on the stock markets, a discount at the end of this year is still a realistic scenario. PvdA and GL, which support the coalition with the pension agreement, therefore demanded a “general pardon” for pension cuts at the end of this year. But Koolmees doesn’t want that.