Some choices revised in preparation for the NexT Pension scheme
In the switch to the NexT Pension Scheme, the Board’s task is to give careful and balanced consideration to the interests of all our members. As we prepare to make the switch, we recently re-examined some of our earlier decisions, including the compensation system and how the financial buffer will be shared among our members. The reason for doing this is that market circumstances have changed, such as the funding ratio and interest rates both going up. Talks with the Dutch central bank (DNB), as our supervisory authority, have also yielded new information. Based on these developments, we decided to recalibrate several of the premises for our switch to the new pension system. The most important issues are explained below.
“In this reassessment, one guiding principle is central for us as a Board: a balanced and careful transition for all our participants. In doing so, we look not only at the current situation, but also at exceptional circumstances, such as very low or very high funding ratios, and at the role of compensation for certain groups.
For me, it is important that you know what to expect when transitioning to the NexT Pension. As soon as there is more clarity, we will inform you accordingly."
Implementation plan: submission and assessment
Philips Pensioenfonds has prepared an implementation plan that describes how the switch to the NexT Pension Scheme will be made, with due consideration for the interests of all its members. Based on talks with DNB, the Board will update several elements of that plan. The changes to the implementation plan were submitted to DNB in late-March, and are currently being assessed.
As soon as DNB announces that the details of the updated plan are acceptable, we will publish it on our website.
Compensation for a balanced transition
A key element of the NexT Pension scheme is providing compensation for the effects of the new way of pension accrual. This compensation extends to a large proportion of our active members. Compensation is applied to ensure that participants who may be adversely affected by the new way of building up pension benefits are compensated for this. Based on new information, the system has been expanded in consultation with the social partners to provide compensation, or a higher rate of compensation, to active members between the ages of 30 and 50. This will be described in the updated implementation plan. The expanded scope of the compensation system is also included in the information on this web-page.
Low or high funding ratio
Our preparations for the switch are based on the present funding ratio of 127%. However, we have also considered less likely scenarios, with a funding ratio that is lower (<110%) or higher (>135%). These extreme scenarios could affect how the buffer is shared among our members at the time of the switch to ensure balance for the various groups.
Although these scenarios are unlikely to actually manifest, the Board believes that it is best to avoid surprises by stating clearly what choices will be made in these situations as well. Those choices are described in the updated implementation plan.
What happens next and further information
As soon as we hear from DNB, we will provide more details about the new choices. At this time, we are focusing on completing the supervisory process with due and proper care.