Reinvesting as standard after retirement date
What does the new law say?
Low interest rates are one of the major reasons for a review of the system. For this reason, among others, the 'variable benefit' has been made possible, allowing for the choice to continue investing after the retirement date in certain cases since 2016. A number of additional measures will reduce dependence on interest rates in the new system.
- One of these measures is that the pension system review makes continued investment with pension money after the retirement date the standard at pension funds and a choice at insurers and PPI's;
- With reinvestment, the employee is less dependent on interest rates at their retirement date. However, depending on investment results, the amount of the pension benefit will change from year to year. A variable pension, in other words.
- For pension schemes at insurers and PPIs, there is a choice to be made. As an employer, you and your employees can choose, when entering into or renewing the pension scheme, to 1) pre-sort for continued investment after retirement date or 2) pre-sort for a fixed benefit.
- Employees then make their own final choice prior to their retirement date whether they want to invest after retirement or not. And, if so, how much risk they are willing to take with their pension money. Even in the interim, employees can already make other choices and thus deviate from the standard you offer as an employer.
What does this measure mean for your pension scheme?
When renewing your pension scheme, you and your employees (or employee representation) make an informed choice. This choice involves setting up the scheme for continued investment after retirement date or a fixed pension benefit after retirement date. If you do not make a choice, then winding down to a fixed benefit pension is the default by law.
Get advice
When determining whether your pension scheme defaults to continued investment after retirement date or pre-sorts to a fixed benefit, it is important to make sure you obtain proper advice. That way, you and your adviser will arrive at a choice that best suits you and your employees.
Employee risk attitude survey
To properly shape the investment policy of our lifecycles, the law requires us to align it with employees' attitude to risk (that is, the attitude employees have towards investment risk). Risk attitude is also an important theme in the pension agreement.
We are therefore conducting a large-scale risk attitude survey among employees with defined contribution schemes at Nationale-Nederlanden. The study focuses on determining the risk the employee is willing and able to take during his or her pension accrual, and during the benefit phase. It is important to identify the pension objective, as well as the attitude employees have towards investment risk. We additionally provide a risk attitude tool. Understanding this risk attitude will help us fine-tune our investment policy to your employees. Go to nn.nl/riskholding for more information (dutch website).