New pension legislation: 6 things you need to know

The main reason for introducing a new pension system is to make it fit for the future. In the old system, pension funds and insurers had to keep large financial buffers to cover the costs of defined pension benefits, years of low interest rates and rising life expectancy. This meant that, for a long time, pensions had not been corrected for inflation and in some cases were even cut. 

The old system also assumed that people would work for the same employer their whole life rather than change jobs, which is a more common occurrence nowadays. The new system is therefore fairer for people on flexible or shorter-term employment contracts.

1. Final-pay and average-salary schemes have been scrapped. Future pension benefits will no longer be guaranteed. Instead, they will depend on pension contributions and the results from investing those contributions. Pensions in the new pension system will therefore reflect the health of the economy. As your pension capital will continue to be invested after you retire and receive pension benefits, the amount of benefits you get may change every couple of years. If you are about to retire, your pension provider may allow you to choose a fixed, constant benefit. In any case, you will get pension benefits for as long as you live. 
2. You will no longer pay more pension contributions as you get older. Instead, everyone will pay the same, flat-rate contribution. This contribution (for your retirement pension) is capped at 30% of your ‘pensionable earnings’, which is the portion of your salary on which you accrue a pension. 
3. Having a flat rate means that every member of a pension plan (on the same salary) pays the same pension contribution, no matter what their age. Younger employees can accrue more pension compared with older employees, as their pension contributions have longer to achieve a return on investment. This has consequences for people currently aged approximately 45 and upwards. Although they may have been in employment for many years, they weren’t able to make larger contributions at the start of their career as younger employees do in the new system. These employees will be compensated. This compensation will differ depending on your employer or pension provider (such as a pension fund or insurer). Pension funds (unlike insurers) in the old system also operate according to the ‘average premium system’, in which younger employees pay towards older employees’ pensions. This was how the system functioned: the older employees had done the same when they were young. Today’s young people would have therefore done the same for them. However, as the average premium system will be abolished, this group of people have paid too much in contributions. How they will be compensated will differ depending on their pension fund. That’s because each pension fund is in a different financial position and has members of different ages. 
4. Surviving dependants’ pension paid out before an employee’s retirement date will no longer be based on their retirement pension but on their salary. As a result, it may be higher than in the old system. If an employee dies before their retirement date, the partner’s pension is capped at 50% of the employee’s pensionable salary. The orphan’s pension is capped at 20% of the employee’s pensionable salary. These pension entitlements are insured on a risk basis, meaning they provide cover only as long as the employee is employed. If the employee dies after the end of their employment, their partner, former partner or children are no longer entitled to a surviving dependents’ pension. This aspect merits extra attention if you or your partner switch employer, set up your own business or become unemployed. If you receive retirement pension benefits, the partner’s pension will become payable upon your death, just like in the old system. This means that a portion of your accrued pension capital can be converted into a retirement or surviving dependents’ pension. 
5. Self-employed workers and employees who aren’t members of a pension plan have the same rights to pay into an old-age pension as employees who are members of a pension plan. The maximum tax-deductible percentage for annuities is therefore 30% (capped at €35,798 in 2025) of the ‘premium basis’, which is your income minus the part over which you will receive your state pension later. 
6. How accrued pensions and current pension payments should be handled is an ongoing topic of debate, with efforts being made to find a balance between all stakeholders’ interests. Finding alignment between social partners, regulators and pension providers and administrators takes time. Even though huge progress has been made, the planned transition date has had to be postponed many times. In any case, pension providers and social partners must have transitioned to the new pension system by 1 January 2028. Of the approximately 150 pension funds in the Netherlands, three switched to the new system on 1 January 2025. Several insurers amended their insured plans in the fourth quarter of 2024.

There are huge differences between the various pension providers in terms of the level of pension contributions, employee contributions and partner’s pension (before retirement). You can find more information on Mijn pensioenoverzicht.nl or your pension provider’s website.

If you’re wondering whether you’ve accrued enough pension to live a comfortable retirement or even retire early, schedule a Financial Future consultation to discuss your future finances with an adviser from the Preferred Banking team.

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