Under new system, Dutch retirees to see average pension jump of 13%, some over 20%

Around 1.4 million Dutch retirees who have already moved to the new pension system will see their benefits rise sharply this year, with an average increase of 13 percent, according to pension consultant Corine Reedijk of advisory firm Aon. Some retirees will see increases exceeding 20 percent.

Reedijk said she cannot recall a year with such high average pension growth. The significant increases are largely attributed to the new pension system, which calculates benefits based on fund returns rather than funding ratios. This change reduces the need for large financial buffers, allowing pension funds to distribute more to retirees. Experts warn that while the system allows for larger increases, it also makes pensions more vulnerable to future declines, though such drops are not expected soon.

Higher returns on financial markets this year also contributed to the rising payouts. Many retirees will receive the increases retroactively, starting April 1, according to Aon.

So far, 24 pension funds have switched to the new system. Aon analyzed the 12 largest funds that have already made the transition. Funds for the construction and hospitality sectors reported the largest increases, while the Metal and Technology Pension Fund (PMT) recorded the smallest gains.

Several major funds, including ABP, the largest in the Netherlands, will transition to the new system next year. Participants at those funds will receive the increases at that time, provided economic conditions remain favorable.