News item | 09-07-2025 | 16:55
Minister Eddy van Hijum of Social Affairs and Employment sees opportunities to better enable pensions to maintain their purchasing power, even if prices rise faster than expected. At the same time, he warns that there are disadvantages to this and that it should not be at the expense of younger participants. More protection against inflation is always paid by taking more risk or by pushing through the capital between generations or to later.
The minister writes this in a letter about the state of affairs regarding the exploration for extra purchasing power instruments. The minister now wants to further investigate the various options to get a better picture of the advantages and disadvantages associated with it.
Minister Eddy Van Hijum: “Pension is about existence for later. You want to be able to enjoy a carefree old age. In the old system, pensions have not been raised for many years – and sometimes even the prices continued to rise. Many elderly people are rightly angry about it. In the new system, pensions can be easier to increase. old.”
New pension system
Pensions that can keep track of the development of prices is an important objective of the new pension system. After many years in which pensions did not go up, trade unions, employers and the cabinet closed the pension agreement in 2019. Part of the new system is that the returns achieved can be used earlier to increase pensions. Calculations show that pension benefits can therefore rise faster. In addition, it becomes clearer how much premium each participant and their employer put aside for their pension and the risks are shared fairly between young and old, which means there is less discussion between generations.
Variants
The minister has looked at five different variants. In good years, power can be set separately within the pensioners group, from which pensions can be increased extra if inflation is unexpectedly high. It is also possible to opt for a somewhat lower pension at the start of the pension, so that there is a greater chance that the benefit can continue to follow the increased prices in the following years. These two variants do not lead to shifts from young to old.
In another variant, a retired participant can be protected against a higher than expected inflation. For this real protection efficiency, a market price must be paid to the other participants in the fund. The Solidarity or Risk Measure Reserve could also be used to absorb realized inflation shocks. Now it may only be used to absorb the higher than expected inflation shocks. With these two variants, it must be carefully looked at how the pros and cons are divided between the younger and the older participants and whether this can be done in a fair way.
In the fifth variant, more investment risk is taken with the pension assets of the elderly. In good years the solidarity reserve is extra filled, and in years when things are going badly, the reserve is used to keep pensions up to keep inflation. The minister warns that with this variant people may be more at risk than they can and want to bear themselves and that there will be a greater financial risk among young people.
Progress
In the fall of 2025, De Nederlandsche Bank (DNB) will calculate different variants. The minister wants to use these calculations to further weigh the pros and cons. In anticipation of this further analysis, the minister will discuss the exploration of extra purchasing power instruments with the Chamber.