Misunderstandings about pensions

Do you – like almost 60% of our participants – sometimes worry about your pension? Do you wonder if you will have enough pension for later, or when your pension is finally going to be raised, or whether something has been arranged for your partner if you die?

We sometimes find that our participants are worrying for nothing. This is why some common misunderstandings are explained below, so you know what the situation really is. We may not be able to remove all worries about pensions, but hopefully, we can clear up the main misunderstandings.

  • Misunderstanding 1: ‘There won’t be anything left in the pot by the time I retire.’

    This is not true. If a pension fund has a coverage ratio of 100% or more, there will be enough money to pay the pensions, both now and in the futureThe coverage ratio is the ratio of our assets to the pensions that we have to pay out. If the coverage ratio is 100%, there will be precisely enough money to pay the pensions. But the government requires pension funds to have a buffer. So a high(er) coverage ratio is important.

  • Misunderstanding 2: ‘I’m paying pension contributions for people who are getting their pensions now.’

    Many people think that they pay pension contributions for today’s pensioners. This is not the case. The contributions paid by you and your employer are for your own pension. You therefore actually have your own pension reserve for later. 
    The state pension (AOW) that you will receive from the government is different. The government uses the contributions of today’s employees to pay for current pensioners. This is probably how this misunderstanding arose.

  • Misunderstanding 3: ‘I’d be better off investing my pension contributions myself’

    For the average Dutch person, it is very difficult to realise the same return as a pension fund over a longer period. This is because we invest for many participants at the same time. We therefore share the investment costs, as well as the risks. 
    Very occasionally, there is a year in which we make a loss on the investments, such as in 2018 and 2022, when the stock markets crashed. But usually, our returns are positive. Over the past 10 years, we have realised average returns of 4% per year.  
    If you would like to know more about how we invest, click here for more information. 

  • Misunderstanding 5: ‘My pension fund will automatically raise my pension every year’

    Unfortunately, pension increases (indexation) are not automatic and are therefore also not a right. We are only permitted to raise pensions if we have enough money for that. This is laid down in law. Our financial position (the coverage ratio) must be sufficient for that.

    The coverage ratio shows the status of our financial health. We may raise pensions if our coverage ratio is 110% or more. Unfortunately, we have not been able to raise pensions in recent years. But fortunately, we have never needed to reduce the pensions either. On 1 January 2022, we increased your pension by 3.0%. And in 2023 by 7.0%. 

    More information on our financial position and the chances of raising or reducing pensions is available here.

  • Misunderstanding 6: ‘My pension will be 70% of my last-earned salary.’

    Sadly, this is not true. Most participants can build up a maximum of 70% of their average salary. How much pension you will receive later depends on your salary, how long you accrue pension for and the details of your pension scheme. 
    However, your personal situation also counts. If you reduced your working hours, for instance, or divorced, your pension will probably be lower. SeeMijnPGBpensioen for the current status of your pension. 
    This shows the net monthly pension you can receive later, including the state pension (AOW), so that if you think that your income will be too low later, you can arrange some extras now.

  • Misunderstanding 7: ‘My partner will receive the partner’s pension when I retire.’

    The partner’s pension is a pension that your partner receives when you die, not when you retire, or when your partner retires. The amount of partner’s pension that your partner receives if you die depends on your pension scheme and situation. 

    The arrangements for your partner’s pension are shown here. If you are married or have a registered partnership, we will know who your partner is. If this is not the case, register your partner with us. You can do this via here. 

    Click here for more information on partner’s pensions and how to register your partner. This page also contains a video on partner’s pensions. We explain what we do for your partner’s pension in less than two minutes.