Changes planned for pension system

The Cabinet is planning some big changes in the pension system. They want to give people a better understanding of their own personal pension accrual and to get rid of the current averages system. The government believes that this would help all workers build up an adequate pension. This is according to the "Outlines of a future-proof pension system", that State Secretary Jetta Klijnsma of Social Affairs sent to the Tweede Kamer, lower house of parliament on Tuesday. The government considers it very important that all workers e able to build an adequate pension, tailored to their individual situations. In the current system there are many people who are building little or no pensions, such as temporary workers and employees without a pension benefits. On the other had there are also workers who are forced to acquire a lot of pension savings. According to the cabinet, this requires a differentiated approach and they will consult with involved parties to explore the possibilities. The cabinet is also looking into the development of a private pension capital with collective risk sharing. This should be simple, explainable and controlled by the participant. The cabinet wants this to be a combination with more customization and more choices, so that a pension can better suit the preferences of participants. Finally the cabinet wants to phase out the current average system, in which all employees pay the same pension contribution and have the same pension accrual per year. The cabinet finds this unjust, as young people pay this premium for longer and thus load more into the pension pot than older people. The cabinet's provisional preference is a new system in which all workers pay the same premiums within a single plan, but the build up gradually decreases as they age. This means that the premium is not dependent on age, but the build up is. The government aims to abolish the average system in 2020 and gradually make a transition to a new pension accrual system. "it is important that we maintain the strong elements of our pension system and strengthen it with new elements for the future. In this way we can ensure that the pension system better suits the needs of the people and the labor market of the 21st century", Klijnsma said about the Outline.