Retirees in Dutch care, construction, metal sectors to see small pension rises in 2027

Retirees from the construction, care, and metal and technology sectors will see a modest rise in their pensions starting in 2027. This was announced on Tuesday by the country’s largest pension funds, NOS reports.

Care sector retirees covered by Zorg & Welzijn will see their benefits rise by 0.75 percent. Construction retirees under BpfBouw will get a 0.8 percent increase, while former metal and technology workers covered by PMT will get a 0.82 percent rise.

These three funds were the largest to switch to the country’s new pension system at the start of this year. They pointed to continued uncertainty in financial markets as a reason for the limited increases. Equity markets have reportedly shown optimism this year about technology company performance, but the U.S. attack on Iran introduced volatility and market swings.

Under the new system, retirees’ benefits fluctuate more directly with a pension fund’s investment results than they did under the previous system. Strong returns can produce faster increases in benefits, while weaker results can more quickly lead to benefits remaining unchanged or, in extreme cases, being reduced.

The funds maintain buffers to help avoid cuts. Younger workers’ contributions are invested with higher risk than those of older workers and retirees. The age-based approach appears in current figures at PMT, where the pension pots of 35-year-olds have returned 10.7 percent so far this year, while the assets of workers nearing retirement age have fallen by 0.3 percent. Assets of older workers and retirees receive greater protection against stock market shocks and interest rate changes, both of which have a major effect on pension values.

At most funds, only one-third of the investment return earned for retirees is paid out immediately. Combined with the more conservative investment strategy for older participants, this practice of spreading returns is designed to reduce the chance of benefit cuts after a poor investment year. The remaining portion of the return is carried forward. In 2028, one-third of that accumulated return, assuming it is higher, will again be used to raise benefits.

Last year, retirees at funds including PFZW, PMT, and BpfBouw received substantial additional increases when their funds moved to the new system. Pension funds are required to hold far smaller reserves under the new rules, and a large share of those released reserves flows into participants’ individual pension pots. Retirees see the effect in their benefits once final calculations are completed.

Another 37 funds, covering 2 million retirees, are scheduled to transition on January 1, 2027. Pension consulting firm Aon recently calculated for NOS that those retirees may receive significant increases. This applies, among others, to retired civil servants, retail workers, transport workers, and bank employees. Increases of between 12 percent and 25 percent are considered quite possible for this group.

By that point, the large majority of Dutch workers and retirees affiliated with a pension fund will have moved to the new system. All pension funds are required to complete the transition by 2028.