From pension accrual to a personal pension capital 

The Future Pensions Act primarily involves a fundamental overhaul of the pensions that employees accrue with their employers within the Dutch pension system, for example your pension with Philips Pensioenfonds.

The Future Pensions Act provides for two types of pension plan. Employers and unions can agree on one of these options. Under each of those pension plans, you accrue pension savings that are yours alone. In the so-called solidarity-based contribution plan the pension savings represent a share in a collectively invested pension capital. Besides plans in which you accrue personal pension capital (known as defined contribution plans), other plans currently exist under which members receive a commitment for pension entitlements. At Philips, Signify and Versuni, this is done on the basis of a fixed contribution paid by the companies. If this contribution is sufficient to award the aspired pension accrual, it is granted. If not, the accrual percentage will be reduced. 

The solidary-based contribution plan (previously referred to as 'New pension contract') is also a defined contribution plan. Members accrue pension capital as individual savings. Your pension capital is collectively invested in the pension fund, together with the pension capital of other members. Your pension capital consists of a share in that collectively invested capital. The returns generated by the various asset classes are divided among the members, according to their age: following a strong investment year, the pension capital of younger members will grow proportionately more than those of older members, and vice versa after a poor investment year. The thought process behind this setup is that younger members have more time than older members to recover from a poor investment year, and so can afford to take greater investment risks. This is a new type of pension plan, which has no equivalent under the existing pension system.

A key aspect of the Future Pensions Act is a new way of accruing pension rights, and the pension premium that is paid for it. Currently, every employee who earns the same salary accrues the same amount of pension every year, regardless of age. Given that the premiums contributed by younger members will generate returns over a longer period than the premiums of older members, the pension accruals of those younger members are cheaper. This is taken into account at Philips Pensioenfonds and employers also pay less premiums for young people than for older people*. However, this is not the case with a lot of pension funds and the same premium is charged for all members, regardless of their age. Both with Philips Pensioenfonds and with those other funds, the pension accrual is the same for everyone. Given that pension accrual is cheaper for younger members, the Cabinet, employers’ organisations and unions believe that it is fairer for them to pay lower premiums to accrue the same amount of pension with all pension funds (like they do now with Philips Pensioenfonds) - or to accrue more pension for the same premiums, which is the option chosen in the Future Pensions Act. Under the new system, all members of a particular pension plan will have access to the same premiums. Younger members will then accrue more pension, while older members accrue less.

In itself there seems to be something to say that this is fairer than the current system, but this switch does create a transition problem. Existing pension plan participants, and in particular 'middle-aged' participants, will accrue less pension in the future, without having had a higher pension accrual in the past. According to the government and the social partners, this disadvantage must be compensated.

This can involve significant costs. You can find more information about compensation in the question "Will disadvantaged members be compensated?"

* If all the contributions paid by the employers are added up and this total amount is expressed as a percentage of the pension base sum (the pension base is the salary over which pension is built up), this results in 29.4% for the flex scheme. This is the total contribution percentage owed, which can also be found in the pension regulations. This percentage applies for a period agreed between employers and pension fund. Employees pay a personal contribution of 8% (Philips), 2% (Versuni) or 5% (Signify) which is part of the aforementioned 29.4%. Signify employees who fall under the Flex-ES scheme and were employed before 1 January 2025 pay 2% of the pension base to the employer.

Under the new system, each member will have their own personal pension capital. Each member will be able to see what the value of those savings is at any given moment and what factors cause that value to go up (such as the premiums contributed and investment gains) or down (including the benefits withdrawn and investment losses). In that sense, pensions will be transparent under the new system. What will be unclear however is what benefits members should expect to receive in the end from their personal pension capital: those benefits will depend on uncertain future developments, for example what returns the investments will generate. Given that investment returns will have a more immediate impact on the value of individual members’ pensions under the new system, this means less certainty regarding the benefits. In that sense, therefore, pensions will not be any more transparent under the new system.

In short: the new system is more transparent about what is in the personal pension capitals of the members at some point, but not about the level of the pensions to be paid.

The pension scheme based on the new law must be arranged by 1 January 2028 at the latest. The aim for the participants of Philips Pensioenfonds is that the new pension scheme will apply from 1 January 2027. So it will take quite a while before you notice anything concrete.

In this news item you can read all about the decision-making process to arrive at the new pension scheme.

No, you will receive a pension as long as you live. You don't have to worry about running out of money for your pension.

On the retirement date, the annual pension is determined partly on the basis of life expectancy. This concerns the annual pension that a participant receives from his or her own pension capital. You might then expect the pension capital to have run out as soon as a participant has reached that life expectancy. If a participant becomes older than expected, this participant would no longer receive a pension from that moment on. That is of course not the intention.

The Future Pensions Act stipulates that this so-called longevity risk must be covered. This way there is also pension income if one grows older than expected. The remaining pension capitalof participants who die earlier than expected are distributed among the participants who live longer than expected. The supplementation of the pension capital as you become older therefore takes place annually and gradually and not only from the moment you have become older than expected.

This does not mean, however, that a participant does not run any longevity risk at all. If fewer participants die than expected, less pension capital will be available than necessary to supplement the pension capital of participants who live longer. This effect is relatively limited in our Fund, because the number of participants who die each year is fairly stable due to our size. Finally, if not fewer, but more participants die than expected, more pension capital will be available to supplement the pension capital of participants who live longer.

In general, it makes no difference whether you retire (early) just before or just after the transition. Since the social partners (your employer and trade unions) have requested the Fund to make use of the option of transferring in, the new pension rules will also apply to the pension already accrued and the pension that already started before the transition to the new pension scheme.

Retiring early does mean that you are no longer entitled to the compensation scheme. The following applies to this: the abolition of the average system only applies to future pension accrual. If you leave employment or retire before the transition, there is no future accrual and therefore no disadvantage for our Pension Fund from the abolition of the average system. In that case, there is also no right to compensation. As a participant, you are wise to take the compensation into account when deciding on your retirement age or date of retirement. You will only receive the compensation if you are accruing pension with Philips Pension Fund at the time of transition. This also applies if your pension accrual with us is continued due to disability.

The basic assumption under the new pension system is that your pension capital will continue to be invested after you retire. This arrangement is called a ‘variable pension’. The portion of your pension capital that is still invested will continue to generate returns after you retire, which can be used to raise your pension. 

There is now a collective asset that is used to jointly finance the pensions of all participants. The Board manages the collective asset in the interest of all participants and naturally takes into account the laws and regulations that apply to pension schemes. You are not entitled to a part of that asset, but a claim to a pension payment. The starting point of the new pension system is to make this more personal by giving each participant insight into their own pension assets. This pension asset will also continue to be invested collectively in the future.

The amount of premium your employer contributes to your pension is determined in your employer's collective labor agreement. This is already the case and will remain the case in the new pension scheme. In the future, a lower or higher contribution can be agreed upon. The starting point in the agreements made about the new pension scheme is that the total premium remains unchanged. However, different agreements have been made per employer about the premium that you contribute as an employee. You can read here which premium applies to you.

In the new system, the investment risk lies with the participant. This is in fact already the case in the current scheme of Philips Pensioenfonds. However, in the new system you will see the investment results more directly in your pension pot or in the amount of your benefit. Your pension will move more directly with the economy. This gives you the chance of a higher pension (if investment returns are positive), but you also run the risk of a lower pension (in the event of disappointing investment returns). Your pension will therefore become less certain. Moreover, the pension beneficiaries at Philips Pensioenfonds are protected against disappointing (investment) results by the solidarity reserve. At the time of switching to the new pension plan, that reserve will be filled using the Pension Fund’s buffer. Later, it will be topped up by withholding small amounts from the positive investment yields of the pension beneficiaries and other members aged 55 and up. The solidarity reserve will be used to top up your pension if it would otherwise need to be lowered. However, this is possible only if the solidarity reserve contains enough assets. The stability of the benefits is also increased by spreading the financial results (both positive and negative) over a number of years.

In the new pension plan, pension beneficiaries of Philips Pensioenfonds are protected against shortfalls in investment returns by the solidarity reserve. At the time of switching to the new pension plan, that reserve will be filled using the Pension Fund’s buffer. Later, it will be topped up by withholding small amounts from the positive investment yields of the pension beneficiaries and other members aged 55 and up. The solidarity reserve will be used to top up your pension if it would otherwise need to be lowered. However, this is possible only if the solidarity reserve contains enough assets. However, any amount from the pension fund’s assets that is put into the reserve cannot be used for the personal pension savings of members.

How much pension you can draw from your pension capital after you retire will not be predetermined: it depends not only on your pension capital when you retire, but also on interest rates. Interest is a key factor in determining how much money you need in order to draw a lifelong pension. The higher the interest, the more pension your pension capital will provide, and vice versa.

If your pension capital yields more returns than the interest after you retire, it might be possible to raise your pension after you have started drawing it. The opposite is also true, however: if the returns go down, your pension could also be lowered.

Before your retirement, the investment risk will be lowered gradually, and your pension capital will be increasingly invested in safe investments such as government bonds. Those investments provide protection against fluctuating interest rates. This way, as your retirement date comes closer, you will have protection against the risks of purchasing a pension on your retirement date.

The reason that you will soon not be able to make your own investment choices is the choice of the social partners for the solidarity-based contribution plan. The solidarity-based contribution plan does not allow your own investment choices. The pension assets are still invested collectively, but the return is age-dependent. If you had chosen the other variant, the flexible contribution plan, you would have been able to make your own investment choices within certain limits.