State Secretary Jetta Klijnsma envisions a new pension system in which the employee and employer pay a fixed premium and the pension funds have to reduce pension benefits less quickly than is currently the case. The risk of the achieved results will be more borne by the employee. The State Secretary is still seeking advice from the SER. A bill for the new Pension System will follow only in 2015.
It is good that research is being conducted on how to make our unique pension system future-proof. The current system seems to be becoming unaffordable due to aging.
A mandatory premium for employer and employee is of course required. After all, it is much more tempting to spend money than to set it aside.
In my opinion, however, the proposal from Klijnsma, which allows pension funds to reduce benefits less quickly, requires further reflection. For the younger generations, it is not clear whether, and when, they will receive a pension. They only know that they will work longer and pay premiums all that time. If pension funds are not allowed to cut benefits, it effectively means dipping into the future’s reserves. That is not very appealing to the younger generations. If there is less money in the fund because of lower premium income due to aging and disappointing investment results, then less must also be paid out.
A new pension system must provide an answer to the issue of solidarity between the different generations. Whether Klijnsma’s proposal addresses this is not yet clear.
