Pension scheme in the new pension system: solidarity reserve

29 October 2024 | News

The new pension scheme is a solidarity-based contribution scheme. An important and mandatory element of this scheme is the solidarity reserve. The solidarity reserve is a separate reserve that protects the pension benefits. The solidarity reserve has two objectives:

  1. Protecting pension benefits from decreases
    By making use of the solidarity reserve, we can ensure that pension benefits do not fall (too much) in bad years.
  2. Protecting against longevity risk, the risk that individuals will live longer than expected
    For example, it may happen that you become older than we have taken into account in our calculations beforehand. This would then lead to a lower benefit because we would have to pay out your pension for a longer period. But even then, we don’t want your pension to be (much) lower. Other changes in accounting policies may also have an impact on the height on pensions benefits. With the solidarity reserve, we ensure that your pension does not become (much) lower.

The social partners have agreed that the solidarity reserve should be 7.5% at the start of the new pension scheme. This seems to be high enough to prevent pensions from dropping in a year. Each year, 20% of the reserve can be used to supplement pension benefits up to the level of the previous year’s pension benefit. In this way, we can absorb several bad years. This reduces the chance that the pensions of pensioners will be reduced in a year.

All information about the new pension scheme and the (summary of the) transition plan can be found here

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Pension scheme in the new pension system: solidarity reserve

29 October 2024

The new pension scheme is a solidarity-based contribution scheme. An important and mandatory element of this scheme is the solidarity reserve. The solidarity reserve is a separate reserve that protects the pension benefits. The solidarity reserve has two objectives: Protecting pension benefits from decreases By making use of the solidarity reserve, we can ensure that pension benefits do not fall (too much) in bad years. Protecting against longevity risk, the risk that individuals will live longer than expected For example, it may happen that you become older than we have taken into account in our calculations beforehand. This would then lead to a lower benefit because we would have to pay out your pension for a longer period. But even then, we don’t want your pension to be (much) lower. Other changes in accounting policies may also have an impact on the height on pensions benefits. With the solidarity reserve, we ensure that your pension does not become (much) lower. The social partners have agreed that the solidarity reserve should be 7.5% at the start of the new pension scheme. This seems to be high enough to prevent pensions from dropping in a year. Each year, 20% of the reserve can be used to supplement pension benefits up to the level of the previous year’s pension benefit. In this way, we can absorb several bad years. This reduces the chance that the pensions of pensioners will be reduced in a year. All information about the new pension scheme and the (summary of the) transition plan can be found here

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