From a yearly increase to a pension that moves with the markets

Each year we look at whether pensions can go up in line with price rises. That applies both to those already receiving a pension and to those still building one up. Next year it will be different. On 1 January 2027 we’ll share out our current buffer, and that increase is already built into it. We expect it to be quite a bit higher than price rises. After that, your pension moves with the results of our investments and with interest rates.

How does it work now?

To be able to raise pensions, our investments need to earn more than we need to pay all the pensions of today and the future. That’s why we invest part of our money with some risk. That extra return is what makes the increase possible.

At the moment that increase is linked to price rises, also known as inflation. Each year on 1 February we look at whether we can raise pensions, and we try to let them rise in line with prices as much as we can. Even when investments do very well, pensions don’t rise any further than that.

We pay the increase from our buffer. The size of that buffer determines how much of the price rises we can cover, and whether we can make up for increases we missed in the past. So it could happen that we still raised pensions in a year with low returns, because the buffer was big enough. That way of working is now coming to an end. That’s because the buffer is going to everyone.

What changes after the transition?

From 2027, the buffer is no longer the deciding factor. Your pension then moves with the results of our investments and with interest rates. If things go well, your pension goes up. If they disappoint, it can go down. Already receiving a pension? Then we prevent big jumps from year to year. We spread each year’s result over three years, for all pensioners together. That applies to gains as well as setbacks.

Why no separate increase on 1 February 2027?

Because pensions now move with the markets, we need far less buffer. So on 1 January 2027 we’ll share the current buffer out among everyone with a pension with us. Are you still building up a pension, or did you build one up with us in the past? Then your pension pot grows. Already receiving a pension? Then your pension goes up straight away. That share-out already includes the increase you’d otherwise have received separately. So there won’t be a separate increase in February. Given the size of our current buffer, we expect you’ll get quite a bit more than this year’s price rises.

When will you know what you’ll get?

At the end of November you’ll receive a letter with an initial calculation. It will tell you what the transition is expected to mean for your pension. Already receiving a pension? Then we won’t know exactly how much higher your pension will be until April. You’ll receive that amount backdated to 1 January, so you won’t miss out on anything.