The UWV, De Unie and the other trade unions are working together in a steering group towards a new pension scheme. We must adjust the current pension scheme, because the Future Pensions Act (Wtp) provides new regulations for pension schemes. The Wtp requires that we have the transition plan for the transition to the new pension scheme ready by December 31, 2024.
Information for employees
Not everyone is equally well informed about pensions. That is why it is important to involve everyone in the changes you will have to deal with. In the series: on the way to the 2024 pension agreement in principle, collective labor agreement parties inform UWV employees. Would you like to read the first message again? Which can here.
Theme 1: preventing fluctuations
Part 1 of the series is about preventing pension benefit fluctuations.
How is it arranged now?
The current pension scheme is much less prone to the problem of fluctuations. When you retire, you will receive a fixed benefit. This benefit will be increased annually, if possible. This attempts to limit the effect of inflation.
If the coverage ratio of the pension fund is much too low, the pension fund must reduce the benefits. We call this stamping, but this almost never happens because everything is aimed at maintaining the level of the benefit.
Why fluctuations in the new pension scheme?
The new legislation wants pensions to respond more quickly to investment results. Positively by distributing the proceeds of the investments more quickly, and negatively by making cuts more quickly if things go wrong, but the collective labor agreement parties want to offer sufficient security. That is why we think it is important to prevent large fluctuations in the pension benefit.
Protection of pension benefits against fluctuations
Pension premiums are transferred to the pension fund every year. This money is invested by the fund. This is necessary, because with investments the fund can realize returns that in turn benefit the employee. It provides the employee with a higher pension.
The older you are, the less risk
As the retirement date approaches, the investment risk is reduced. Older people can take fewer risks because they have less time to absorb any setbacks.
Book
To protect the pension benefits of retirees, there is a reserve. This acts as a buffer to ensure that retirees continue to receive a stable pension as much as possible. Even if the return on investments is disappointing.
Allocating returns
If the economy is doing well, the pension you have built up can soon increase more quickly. But this pension can also be reduced if the economy deteriorates. The pension therefore becomes more flexible. We strive for a stable pension benefit, a benefit with as few downward 'results' as possible and limited upward 'results' (preventing extremes).
There are two tools to achieve this.
- Spreading investment results
Spreading means that both positive and negative investment results are spread over a number of years. This smoothes out the outliers in investment outcomes, both up and down. - Book
If the spreading has insufficient effect, the pension fund will use the reserve to prevent decreases in the pension benefit as much as possible. Positive investment results are used to replenish the reserve.
Conclusion
You will see fluctuations in the pension benefit in the new pension scheme. You receive a variable benefit that moves with the market. We do use instruments to prevent major fluctuations. The goal is to keep the benefit stable.
Next topic
The next theme is about the survivor's pension. The introduction of the Future Pensions Act requires us to make changes to the way in which benefits are provided to surviving relatives.
Contact
Do you have questions about this message? Please contact the advocate Inge de Vries by sending an email to: inge.de.vries@unie.nl
