Newsflash National Pension Agreement

New arrangements are more concrete than ever!

White smoke: government and social partners conclude arrangements for National Pension Agreement

The government and the social partners are in accord: there are new arrangements for the National Pension Agreement. The main outline agreements, that were made in June 2019, have been worked out in further detail and all parties are on the same wavelength. The supporting groups of all parties still must agree and that is on the agenda for the next few weeks. The idea is that the transfer to the new pension system will take place in phases between 2022 and 2026. In this way, employers, employees and pension providers will have time to implement all the changes in their own pension arrangements. In this newsflash, we share the most important arrangements with you, as far as these are known at this moment.

No more guarantees, but a projected return

In the past weekend, some newspapers carried headings that ‘everybody will benefit’. The concept of guarantees is abandoned by pension funds and we accept that uncertainty is necessary in the pension system. We do that by calculating with a different interest rate. No longer the risk-free interest rate, such as in the current pension system, but a ‘projected return’ in which we include future, expected results. By calculating with this projected return, the funding ratios will increase. As a result, indexation can sooner be granted on the pensions. Due to the uncertainty, the pensions can also be cut sooner, but this volatility is part of the new system. There are no guarantees anymore, these are exchanged for expected pension entitlements.

A maximum pension contribution instead of a maximum accrual percentage

The financing of the pension schemes will also change. While in current schemes, a pension amount is still promised to employees, this will change into a promised contribution. This contribution is invested and, depending on the results, the employee will receive his pension on the pension date. This contribution will be the same for everyone within a company or sector and that is facilitated through the tax system. The maximum contribution will likely be 33% of the pension base. At the moment, a contribution based on age is paid or a fixed contribution for everyone (‘average contribution’). This average contribution is common practice with industry pension funds (such as ABP or Pensioenfonds Zorg & Welzijn).

Compensation for relinquishing solidarity

The current average contribution contains a solidarity element: when you are young you pay too much for what you accrue and when you are older you pay too little. As the same contribution is paid and granted for all ages in the new system, the solidarity in the contribution is relinquished. For people in the age group from about 40 to 50, this means that they have paid too much for years and now that they would start to benefit from the system, the system is changed. The idea is that this group will be compensated from buffers of the pension funds. If pension funds start to calculate with a projected return, the funding ratio will be higher. As a result, a buffer is formed, and this buffer will be used for this compensation.


Employers with a defined contribution scheme or insured average pay defined benefit scheme: transition arrangement for current employees

For employers and employees who already have a defined contribution scheme or an insured scheme, it will not be possible to finance compensation from a buffer. For this reason, it has been discussed that they are allowed to keep the scheme with a contribution that increases with age for the current group of employees. The new arrangement will then apply to all new employees. During the past weekend, the Association of Insurers called this a ‘flaw’ in the new National Pension Agreement. The Association advocates that companies with such schemes will be allowed to maintain the old scheme for both existing and future employees and may choose themselves at which moment they wish to switch to the new system.

Supplementary measures: prevent pension cuts as much as possible, arduous professions and AOW age

With the transfer to the new system, the government prolongs the limit for cuts of pension entitlements for this year. Pension funds will only have to cut the pensions if they have a funding ratio that is lower than 90% at the end of this year. In conclusion, arrangements have been made with respect to arduous professions and the delay in the increase of the AOW age. These are arrangements that had previously been made, but that had to await the detailed implementation of the National Pension Agreement for the further legislation process.

What can you do?

The new measures, but also the attending timelines, are more concrete than ever. Between 2022 and 2026 there will be changes in the pension schemes for all employers, trade unions, works councils, pension funds, employees and participants of pension schemes. This implies that employers can start to implement the new legislation at short notice. What does this new legislation mean for your pension scheme? When is a favorable moment to switch to the new system? Does your pension scheme fit within the rule of a pension contribution of 33% of the pension base and how will you deal with compensation?


Maarten Reesink (Pension consultant at Montae & Partners)
Email: maarten.reesink(@)
Mobile: +31 (0)6 15 61 01 85

About Montae & Partners

We are a knowledge-intensive and professional all-round employee benefits organization. With 140 employees located in offices in Rijswijk, Gouda, Amersfoort, Utrecht, Eindhoven and the Caribbean. We serve pension funds, national and international enterprises, works councils and individual employees. We do this with the deployment of smart technology such as RiskProfiler – how much risk can and does an employee wish to take? – and the digital learning platform Learnster, which enables the development of a tailor-made course for HR, works council, Finance or individual employees.

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