New system: Those building pension with insurer could lose thousands when switching jobs

Netherlands residents who are building up a pension through an insurer could face a significant pension gap if they change jobs under the new pension system. They could accumulate thousands to tens of thousands of euros less pension than intended, pension experts warned in NOS.

Most Dutch people automatically build up a pension through a pension fund. But approximately 1.6 million workers have a pension insurance policy through their employer. Just like pension funds, these insurance policies must comply with the rules of the new pension system by 1 January 2028.

The new Pension Act stipulates that everyone in a pension plan pays the same premium, regardless of age. This was already the case for pension funds, but with pension policies, workers gradually contribute more of their salary as they get older. People just entering the workforce contribute around 8 percent, while those approaching 60 contribute around 35 percent.

Pension experts expect the new premium contribution rate to be around 16 percent. A worker with a pension policy halfway through their career, and already contributing more than 16 percent on the old plan, would then suddenly pay less for their pension. That means more income, but also less pension accrual.

“This could mean thousands to tens of thousands of euros less pension capital,” Frank Verschuren, a pension advisor at AethiQs, told NOS. AethiQs advises companies and works councils on the consequences of the new pension system.

Marike Knoef, an economics professor affiliated with the pension think tank Netspar, confirmed that this could be an issue. “The new system has many advantages, but such a major change can have adverse consequences in specific cases.”

To address this issue, companies could keep employees who were employed before 2028 on the old scheme. This way, there will be no pension gap. Employees who joined after 2028 will automatically fall in the new scheme, with the same premium for all ages.

Verschuren expects that the vast majority of companies that use pension policies will retain the old scheme. But that doesn’t solve the problem for employees who change jobs. They will be placed in the new scheme with their new employer.

The pension experts advise such employees to address the pension gap, for example, by demanding a higher salary.