Existing rights
Current pension rights will move to the new flexible scheme.
This means everyone will take the pension they have built up in the current basic scheme with them, plus a share of the buffers.
The pension fund’s collective buffer, which belonged to all members together, will be divided into individual pension pots. In doing so, the pension fund has taken the rules of the current scheme as its starting point. It considers these the most balanced basis for distributing the buffers.
Step 1: your accrued pension is converted into capital
The pension you have already built up will be converted into capital and transferred to the new scheme. Any UOP capital will also be added to your personal pension pot.
Step 2: funding the statutory provisions and reserves
Next, the statutory provisions and reserves are funded. These are considerably lower in the new system than in the old one.
Step 3: setting money aside for compensation
One group of employees is expected to build up less pension in the new scheme than in the old one. This is because the current system of uniform contributions, in which everyone pays the same contribution and builds up the same pension regardless of age, is being abolished. This works out less favourably for older employees. To limit the expected disadvantage for this group, the pension fund will provide compensation. Active members aged over 35 at the time of the transition will receive a one-off additional amount in their pension pot. The amount depends on factors such as your age and salary. This compensation costs around 1.5 percentage points of the funding ratio. On the new scheme project website, you will find a separate Q&A about compensation.
Step 4: applying the standard method
Any remaining assets will be distributed among active members, deferred members and pensioners. In doing so, the pension fund follows the standard method prescribed by law. We then apply a limited redistribution to achieve a balanced outcome for all groups of members. De Nederlandsche Bank (DNB), the Dutch pension regulator, has approved this.
The pension fund is now in good shape
The funding ratio is currently around 155%. We don’t know what the funding ratio will be at the time of the transition, but the pension fund is taking steps to reduce the risk of a sharp fall. For example, it has bought a put option, which acts as insurance against a fall in the value of its equity portfolio. It has also increased the interest rate hedge on its liabilities to 100%, to limit the impact of any fall in interest rates. In this way, we aim to keep the funding ratio as high as possible. There are still scenarios in which the funding ratio could fall, but there is now a reasonably high level of protection.
The current gross supplementary scheme will also transfer
This is already a defined contribution scheme. Members of this scheme will also receive a share of the buffers in step 4.