Over seven in 10 Dutch people know something will change in the Dutch pension system, yet almost half are unable to name a concrete change, according to research Nibud.

The research found that awareness of the new system was slightly higher among older workers, the highly educated, and men.

When asked about the new system without prompting, respondents mentioned individual pensions compared to collective or universal ones and uncertain pension benefits, suggesting that people thought the new system would make their future benefits less predictable or more variable.

To discover people’s knowledge about the new pension system, Dutch pension fund ING sent out a quiz on its website about the pension system.
 
The majority (79 per cent) of the Dutch pension savers said that for a closed fund like ING, switching to the new pension system made sense, while 21 per cent said it did not.

ING suggested the switch to the new system could offer advantages for closed funds, including maintaining fewer high buffers therefore the fund expected to pay out more money to participants.

In addition to this, the fund also said it expected that participants would get greater benefits from the new system on average than participants at many other funds, due to ING’s high funding ratio.

However, the research also found that 14 per cent of the respondents thought that for participants who have been retired for years, nothing would change in the event of a transition to the new pension system.

It also pointed out that the vast majority was aware that even for a closed fund something would change for participants. For those who are retired, benefits will move in line with the economy, with the possibility of it increasing or decreasing. Pensions will still be adjusted annually.

Nibud explained in the Financieel Dagblad that in the new system, risks would be placed more explicitly on pension participants.

ING said in the event of a transition to the new pension system, part of the current high buffer of more than 150 per cent would be given to the participants to increase pensions.

It predicted there would be a sufficient buffer to absorb future shocks in most cases and if larger shocks occur that could only be absorbed by the current high buffer, part of the increased pension would need to be surrendered. ING said this was “inevitable”, but it does not predict this currently.

The research also advised pension funds to communicate to participants more clearly what they can opt for when transitioning to the new system and what they cannot.

The Nibud study found most people wanted to choose whether their pension would be fixed or variable, but in many schemes, this choice was made for them.

ING said it will have a variable pension benefit, which will be adjusted annually.

---