Is your pension set to grow or decline?

NN CDC Pensioenfonds looks ahead at pension increases for 2021. With a sample calculation, we’ll give you insight into your pension based on the lower accrual rate in 2021 and 2020. So you know what to expect.

Will your pension keep up with rising prices?
Whether your pension rises to keep up with inflation in a given year depends on Dutch laws and regulations. The most important factor is the pension fund's policy funding ratio, which is equivalent to its average funding ratio for the preceding 12 months. Only if the pension fund’s policy funding ratio is higher than 110% will the pension fund be able to increase your pension to ensure your purchasing power is retained despite inflation and rising prices.

Every year, Statistics Netherlands (CBS) measures the percentage by which consumer prices rise in the Netherlands. If NN CDC Pensioenfonds can increase your pension, it will apply CBS's percentage.

Full or partial increase?
The pension fund is only allowed to increase your pension by the full percentage if its policy funding ratio exceeds the level required by law. At present, the required level is around 125%. If its policy funding ratio is between 110% and 125%, the pension fund is allowed to grant partial indexation.

Click here for an overview of the pension fund's increases in recent years.

When will I be informed?
Based on the fund's policy funding ratio as at 30 September 2021, the board will decide whether any indexation will be granted. As at 31 May, the fund’s policy funding ratio was 106%. At present, we do not yet know whether we will be able to increase your pension for 2021 (indexation). NN CDC Pensioenfonds will inform you by the end of 2021.

How much will my pension accrual be in 2022?
At present, you are a participant of NN CDC Pensioenfonds. The pension agreement was closed in July 2019 and will remain valid until 31 December 2021. We do not know at present how much pension accrual will be possible in 2022 and the years after that. We will inform you as soon as the employer and the trade unions have made a decision.

What will I receive from the age of 68?
NN and the trade unions aim for pension accrual at the maximum rate allowed under Dutch tax law. The target level is 1.875%. For the past two years, the fixed contribution – combined with low interest rates – has not been enough to fund the targeted pension accrual rate.

If your pension accrues at a lower rate, the amount of gross pension benefits you’ll eventually get will be lower as well. In 2021 your pension will accrue at 1.428% instead of 1.875%. And in 2020 your pension accrued at 1.552% instead of the targeted 1.875%.

To give you an idea of the amounts involved, we have worked out an example below. Based on your pensionable salary and pension base (i.e. your pensionable salary net of the state pension offset (franchise)) you can make a rough estimate.

Pension base 2021	48.000
Targeted accrual 2021	900
Accrued in 2021 after cutback	685
Difference in accrual	215
The cutback of the accrual rate in 2021 means your gross monthly pension benefits (from the age of 68) will be reduced by	18

 

Pension base 2020	48.000
Targeted accrual 2020	900
Accrued in 2020 after cutback	745
Difference in accrual	155
The cutback of the accrual rate in 2020 means your gross monthly pension benefits (from the age of 68) will be reduced by	13