Some 2 million Dutch retirees could get significant pension increase next year

Approximately 2 million Dutch retirees look set to get a significant increase in their pension payouts next year. Pension funds transitioning to the new system on January 1 are currently in a very favorable position. If this remains the case for the last two months of the year, retired participants are looking at potential increases ranging from 12 to 25 percent, NOS reported after asking pension consultancy Aon to calculate the state of the ten largest transitioning funds.

A total of 37 funds with 7.7 million participants are set to transition to the new pension system next year. Around 2 million of those participants are already retired. Aon examined the ten largest funds transitioning next year, accounting for 95 percent of all Dutch people who will transition to the new system in 2027. On average, pensioners covered by these funds will see an increase of 17 percent.

Under the new system, the collective pool of funds is divided into individual accounts. These personal accounts include the capital an individual has accrued during their working life.

The pension funds will also distribute their reserves - the surplus capital remaining after all obligations to participants have been met- across the accounts, minus a portion set aside as a buffer to supplement retirees’ payouts should stock market performance falter. The larger the reserve, the more there is to distribute.

For those still working, this one-time addition is deposited into their individual accounts, where it continues to be invested. For retirees, the impact of this amount is immediately reflected in their monthly pension payments.

The increase is set to take effect on January 1, but pensioners will have to wait for the final calculations in the new year. Once the figures are verified, the increase will be reflected in their monthly payments, with any increase covering the first few months of 2027 applied retroactively.

There is still some uncertainty for the last two months of the year. A drop in interest rates could lower the funding ratio, leaving less capital available for distribution. Pension funds could also be affected by setbacks in the stock market.

"The final two months of the year remain a critical period, but if the situation stays stable, participants in these funds are well-positioned for a strong start in the new system," Corine Reedijk of Aon told the broadcaster.