The CDC pension plan will take effect on 1 January 2014. Two new pension funds have been founded.

New pension plan

• From a final salary system to an average salary system with an accrual ambition
• Defined contributions
• Pension indexation
• Shifted risks
• Standard pensionable age to go up
• What will happen to pension rights already accrued in the current fund?
• Two pension summaries in 2014
• The next steps for NN CDC Pensioenfonds

More information

Over the next few months, you will receive a lot of information from NN CDC Pensioenfonds. If you already have any questions concerning your pension, just call the Pension Desk at 088-1162 421 or send an e-mail to pensioenloket@nn.cdcpensioen.nl. In 2014, we will be organising meetings to explain the new pension plan. Details will be published in HR2read.

From a final salary system to an average salary system with an accrual ambition
Insurance/IM currently has in place a final salary system for your fixed income, combined with an average salary system for parts of your variable income. As from 2014, we will have only one system. Starting on 1 January 2014, your total annual income will accrue pension under an average salary system as long as you stay employed by ING Insurance/IM. Your annual pensionable income (i.e. income that accrues pension) will increase by more than €4,500 per year. This is because the level of your income that does not accrue pension will be lowered to € 15,000. Under the current final salary system, this level is € 19,623. Our ambition for annual pension accrual is 2%, which means that, provided the annual contributions are sufficient, NN CDC Pensioenfonds can accrue pensions at 2% per year.

Defined contributions
Insurance/IM will pay an annually defined contribution to NN CDC Pensioenfonds. Insurance/IM and its employees will pay for this contribution together. More information about this will be published in HR2read in December. Provided the annual contributions are sufficient, NN CDC Pensioenfonds can see to it that your income accrues pension at 2% per year. This is what we refer to as our accrual ambition. Our calculations project that the contributions will be sufficient to allow your annual income to accrue pension for that same year. 

Pension indexation
NN CDC Pensioenfonds invests the contributions and uses the return on these investments to realise the accrual ambition and enable payment of your pension when you retire. In addition, the return on investments is used to fund indexation of your pension. Indexation is important because it will ensure your pension’s spending power is maintained. One of the sources of funding for future indexation is the return on investments made by the fund. This means that NN CDC Pensioenfonds will be funding indexation instead of your employer, who funds indexation under the current pension plan. As a result, the amount of the indexation, if granted at all, will be entirely dependent on the financial position of the fund itself, rather than on the financial position of Insurance/IM. This is a major change. When determining the defined contribution, the risk mark-up and the expected return on investment combined is set at a level that ensures 80% likelihood for indexation. This is what we refer to as our indexation ambition. 

Shifted risks
However, results may be disappointing: contributions may be inadequate or return on investments may fall below expectations. As a result, accrual and indexation of pension will be lower than envisaged. There is even a risk that the defined contribution is insufficient to cover the 2% accrual of your pension. This is why we use the terms ambition and indications when referring to pension. You won’t know how much pension you’ve got until you actually retire. Even the ambition to pay out a certain level of pension to participants who have already retired isn’t always feasible. If the fund’s performance fails to meet the envisaged ambition or if its financial position falls below expectations, Insurance/IM will not make additional contributions, which it does do under the current pension plan. On the other hand, all of the contributions paid to NN CDC Pensioenfonds will be kept by the fund and will not be repaid to Insurance/IM, which the current fund does do. By paying its annual contribution, Insurance/Investment Management will be completely discharged of its pension commitment.

Standard pensionable age to go up
Under the current system, you build up pension until you turn 65. The accrual ambition for the new pension plan is based on a standard pensionable age of 67. All employees are allowed to retire early as from their 60th birthday, in which case accrued pension rights are calculated to correspond to the employee’s chosen date of retirement. If you’ve been employed for a long period of time and a large portion of your pension has been accrued under the current system, which is based on retirement at the age of 65, your pension will not be seriously affected if you decide to retire at the age of 65.  

What will happen to pension rights already accrued in the current fund?
Pensioenfonds ING administers the current pension plan for employees of ING Bank and ING Insurance and ING Investment Management. On 1 January 2014, pension rights will no longer accrue in this fund and the policy for indexation of these rights will change. As long as you stay employed by Insurance/IM, these pension rights will be increased by the same percentage as the salary increases that have been agreed under the Collective Labour Agreement. However, they will not be increased in line with individual salary increases, as pension accrual will no longer be linked to your salary.

If you leave employment after 1 January 2014, you become a former participant. Your pension accrual in the Pensioenfonds ING will be eligible for conditional indexation based on the price index, which will be maximised at 3%. This indexation is dependent on funding by the employer. In addition, ING will continue to be under a duty to pay supplemental contributions if Pensioenfonds ING’s financial position falls below expectations. 

Two pension summaries in 2014
With effect from 1 January 2014, you will be participating in two separate pension funds: Pensioenfonds ING, administering the current pension plan, and NN CDC Pensioenfonds, administering the new pension plan. This also means you will be receiving two pension summaries in 2014 (Universal Pension Overviews, or UPOs). 

The next steps for NN CDC Pensioenfonds
As a first major step, NN CDC Pensioenfonds has been founded. The next step will be for the fund to start up its administration, its asset management, its consultation procedures and its communication systems to take effect on 1 January 2014.