In a letter to the House of Representatives, the five biggest pension funds emphasize that the chances of increased pensions are greater in the new pension system than in the current system. This refutes the criticism of some former politicians and administrators, who last week, advocated putting the new system on hold.
Annette Mosman, chairman of APG’s board of directors, also signed the letter to the MPs. On response to it, she commented, “As the biggest pension administrator in the Netherlands, we also advocate for the new system, as the pension funds do. That is why we must act now so that our pension system will remain among the world’s best in the future and members and pensioners can continue to count on a good pension. It is a huge operation, but as a sector we are putting our shoulders to the wheel. We believe in the benefits of the new system, which we jointly set out in this letter.”
The letter writers explain that indexing pensions is difficult now because pension funds under the current system are required to maintain high buffers. Under the Future of Pensions Act, those buffers are no longer mandatory, which actually increases the chances of pensions going up.
One of the core values of the current system, solidarity, is also an important part of the new system. “Together we share risks for a lifelong old-age pension, protection from the financial consequences of disability and protection of surviving relatives in the event of the participant’s death,” write the signatories, which include the CEOs of the five biggest pension funds.
An important advantage of the new system is that it enables customization. It is always clear to each participant how much personal pension capital has been set aside. Whereas the current system has a uniform pension plan, the personal pension assets in the new system allow participants to determine investment risks appropriate to their age, among other things.
The letter writers point out that converting, or “moving” pre-existing pension assets to the new system, is a crucial part of the transition to the new system. Not converting has several disadvantages, including the fact that the collective would then have to be broken up. This will result in a decades-long cost increase at the expense of participants’ and pensioners’ pensions.
At the conclusion of the letter, the signatories express their conviction that the new system “will lead to an improvement in purchasing power for pensioners in the short term and will provide age-appropriate, transparent and sustainable pension plans for active participants.” They also emphasize understanding the concerns of participants and pensioners and paying attention to them in both decision-making and communication.
The entire letter to the House of Representatives can be read on the Pension Federation’s website (in Dutch).