Changes

The key goals behind the new legislation are to deliver:

• A pension that grows faster. If the economy does well, pensions can grow more quickly. Pension providers can use the profit from investments to increase pension pots and therefore final pensions. However, this also means that if the economy does less well, pension pots might be reduced as investment returns are reduced. It’s important to note that, in order to reduce some of the downside risk, the new Pension Act requires pension funds to hold reserves to limit the reduction where possible. The investment profile is based on the life cycle principle which means more risk (and hopefully return) for younger members of the pension fund and a gradual decreasing of the risk as members get closer to retirement age.
• Pension growth that is personalised and clearer. It will become clearer how your pension grows. Colleagues will have their own pension account or pot, showing all the contributions they have paid during a year. And the investment gain or loss made with this money.
• A pension that is better suited to changing jobs. Employees nowadays change jobs more often or start a business. The contributions paid by employees will go to their own pension at any age.

In simple terms, what's staying en what is changing?

There will still be:

• The state pension (AOW)
• A workplace pension for when you retire
• An occupational disability pension
• A partner’s and orphan’s pension

The following changes

• You will get your own pension capital: the contributions will be invested on your behalf and form a pension capital.
• The amount that is contributed to your pension capital is no longer linked to your age.
• Your pension capital (and therefore the amount of your pension when you retire) will be based on the contributions made and the change (both up and down) in the value of the pension capital because of the investments
• The value of your pension capital will be more closely aligned with the fluctuations in the economy

What will happen to your current pension accruals?

The new Future Pensions Act states that the current scheme will be transferred to the new pension scheme as a standard unless this is financially disadvantageous for you. As yet we do not know what this will mean to you personally.