Next year, millions of Dutch citizens will face a major change as the new personal pension pot system is introduced in 2026. Twenty major pension funds will make the switch to the new system on January 1st, instantly bringing over 5 million workers and retirees under new rules.
This is a gigantic operation involving the transfer of approximately €500 billion in assets. For many funds, December is therefore proving to be busier and more tense than ever before.
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Pension Funds Prepare for the Transition #
After weeks of checks and assessments, De Nederlandsche Bank (DNB) recently gave the green light to twenty funds. This means that 26 of the 146 pension funds in the Netherlands have now adopted the new system. While that may sound like a small share, it actually represents more than half of all Dutch pension participants.
The funds only received approval if they could demonstrate that their plans are fair to all generations. Neither the elderly nor the young should be disadvantaged. The collective assets must eventually be divided equitably among the individual pension pots.
Many other funds have postponed their transition to the new pension system. This is mainly because the preparations proved more demanding than expected. For instance, testing IT systems, cleaning up administration, and reviewing calculation models all take a considerable amount of time.
A Compelling Reason to Switch #
Nevertheless, according to pension expert Anne Laning, there is a very good reason to make the switch quickly. He has previously warned about the vulnerability of the old system during financially turbulent times.
A stress test by Laning shows that funds in the current system lack sufficient resilience against a crisis like that of 2008. A sharp decline in stocks combined with a simultaneous drop in interest rates could lead to a dramatic fall in the coverage ratio for many funds. Mandatory pension cuts during a major financial crisis are also not ruled out.
A Risky December for Funds #
For the funds that are transitioning now, the technical preparations are certainly not the only challenge. The financial markets will play a role right up to the last minute. The size of an individual’s pension pot is ultimately determined at the moment of ‘invaren’—the official transition point. Major fluctuations in the financial markets in December will still affect the starting position of participants.
However, the Pension Federation is less concerned about the money and more about the administrative side. The funds’ systems must be able to flawlessly handle millions of new individual pots, which is an enormous challenge given the scale.
At the same time, other funds are looking ahead: an even larger wave will follow in 2027. One of these funds is ABP, which serves nearly 3 million participants and manages over €500 billion in assets.
Note: For over 1.6 million Dutch people who are building their pension with an insurer, an unpleasant surprise may be looming soon.