The projected future pensions of younger workers in the Netherlands have fallen sharply, by 10% to 20%, since a new pension system was introduced at the start of this year, the Volkskrant has reported.
The figures comes from the quarterly results of three large pension funds – PFZW, PMT, and BpfBouw – which manage the pensions of around 5 million healthcare, technical, and construction workers. The drop is partly a result of the new system, according to the Volkskrant.
Under the new system, each member has an individual pot of invested assets that will form their own pension. Under the old system, funds held a single large pool, topped up by current workers, from which pensioners were paid.
Falling interest rates
The main driver is a fall in interest rates in the first quarter, the Volkskrant reported. Because returns compound year on year, a small change in the rate produces a large change in the projected results.
The war in the Middle East has also hit long-term investments. “The financial markets were driven by geopolitical tensions,” the Volkskrant reported BpfBouw as saying, “particularly the war in the Middle East and the resulting concerns about rising inflation. In addition, growing doubts about the valuation of AI-related investments played a significant role.”
PMT, which has broken the effect down by age, said the projected pension of a 35-year-old has fallen by 16.3% at current levels, that of a 45-year-old by 11.1%, a 55-year-old by 4.8%, and a 65-year-old by 1.6%.
The figures are theoretical and can change again if rates and share prices move. Stock markets reached record highs this week.
Pensioners unaffected
Current pensioners keep their payouts and are not hit by the lower interest rate, because the compounding effect only touches future pensions. Those who moved to the new system on January 1 received a structural increase of between 8% and 20%, because the funds need to hold smaller reserves.
The three funds have hinted that pensions may not be increased in 2027, broadcaster NOS reported. They have also said pensions will not need to be cut, because their buffers are high enough to absorb the current market falls.
PFZW said it was deliberately not yet publishing a similar age breakdown, according to the Volkskrant, because its members need to be informed first.
