Changing jobs could lose thousands in Dutch pension under new system

Under the new Dutch pension system, workers in the Netherlands who have a pension insurance plan are at risk of losing thousands of euros in pension savings when switching jobs. 

Significant pension gap in the Netherlands when switching jobs

While most Dutch workers add to their pension through a pension fund, around 1,6 million people have a pension insurance plan through their employer. Just like pension funds are seeing changes under the new Dutch pension system, pension plans will also differ. 

The new system, also known as the Future Pensions Act, will require everyone in a pension plan, regardless of age, to pay the same premium - as is already the case for pension funds. For example, current plans could see you paying 8 percent when you first start working but increase to 35 percent by the age of 60.

Pension insurance companies need to comply with the new rules by January 1, 2028, and experts expect the new premium to be around 16 percent. This means that if you switch jobs mid-career, you could end up contributing less than you were before. 

"This could mean thousands to tens of thousands of euros less in pension capital," AethiQs pension advisor Frank Verschuren told NOS. "Employees are insufficiently aware of this risk."

More pension awareness needed in the Netherlands

Companies can choose to use the “respective effect”, which allows workers employed before 2028 to remain on the old scheme, as a solution for this. New employees would then fall under the new pension scheme.

However, there are still downsides to this workaround. Employees who are under the old scheme and change jobs will be placed under the new scheme with their new employer, contributing less to their pension. "Think carefully about making that switch or demand financial compensation," says Verschuren. "The closer you get to retirement, the bigger the problem becomes."

An example given by the Dutch Association of Insurers is that of a 60-year-old who pays 21 percent of their salary towards the pension plan, which translates to 7.497 euros annually. Changing jobs and moving to a new pension plan will see the same worker contribute 15 percent, equal to 5.250 euros a year - 2.247 euros less. This creates a pension gap of 15.729 euros by the time the worker retires in seven years. 

Experts encourage workers who are affected to put the extra money aside themselves and to also be more aware of their pensions. "Sometimes it's truly shocking how little people think about this. This is serious money for your retirement. That really deserves more attention," said professor of economics Marike Knoef. Employers and insurance companies are also urged to be transparent about the risks that changing jobs can pose to pensions.