Reinier Geerling - pension expert

Reinier Geerling has a wealth of experience in the pension sector. Six months ago, he started working for an occupational pension fund four days a week. Before that, he was doing advisory work for NN Bank and ING for about 15 years. He was mostly helping customers set up their financial planning, but he was also advising the pension fund. When that was discontinued last August, he and his colleagues figured out how they’d still be able to serve customers. That's what he's now doing the fifth day of the week. The pension fund that currently employs him welcomes his combined jobs. He also gives lots of lectures and seminars, off-line as well as on-line, including for ING CDC Pensioenfonds. His views are inspiring, which is why we asked him to do this interview. If you really want to know all the details, you can take part in the webinar or check the website, which provides lots of information on what you can do to arrange your pension.

Start drawing benefits from your pension as soon as you can afford to
“It isn’t all that complicated,” Reinier told us full of enthusiasm, while also sharing PowerPoint slides during his interview to underscore his views. “The final slide of our standard presentation aims to create awareness of the purpose and necessity of drawing benefits from your pension as soon as you can afford to do so. Prior to the webinar, I always ask the participants to make a print of their personal details on the government's website Mijnpensioenoverzicht.nl. And then to add up all those figures to find out how much pension they've built up in all those pension funds combined, not including their Dutch state pension (AOW). That's income you’ll be receiving the rest of your life. It's just that you don’t know how long you’ll live – and neither does the pension fund, but their calculations are based on collective numbers. Depending on the average mortality rate, a pot of pension money will be available to pay out benefits to you for the rest of your life. You can roughly count on that being around 20 to 25 times the total amount of pension you built up over the years. Mind you, that isn’t an exact figure – it's a rough estimation, more or less, which works very well as an illustration. So for example, if the pension overview says you will receive €15,000 gross, that doesn’t sound like much….but if you multiply it by 25, it's somewhere between 3.5k and 4k. And when I ask participants if any of them have that kind of money in their bank account, no one responds. In other words, your biggest pot of money is in the pension fund. Of course, the next question is ‘How can you make sure you get all that money back?”

Grow old
“The best way is to grow very old, because your pension benefits will keep on going. But, of course, that's beyond our control. So the second best way is to start drawing benefits from your pension sooner.

Why not have a look to see if you could afford to do that? Back to the calculation sample: if you start your retirement two years earlier, you need to divide your pension pot by 25+2 instead of 25. That's less, but it's also sooner. And I always say, ‘When it comes to pension money, take it out as soon as you can.’ The sooner you retire, the sooner you start drawing benefits from your pension pot. However, those benefits will be lower, so you have to weigh this carefully, and consider how much you'd like to be able to spend every month. Say you retired at the age of 62 – you'd start drawing pension benefits from that date, but it wouldn’t be enough. When you reach your AOW retirement age, your AOW benefits would top up your pension. In other words, you’d have a deficit from the age of 62 until your AOW retirement age. You’d have to solve that by yourself, for example by making use of the pension option of temporarily increasing your pension benefits. The pension fund’s Planner can easily calculate how your pension options would work out for you. Additionally, you could put money into a savings account or in investments.”

Your biggest savings pot
“I always advise people to check how much pension they've built up and to make sure they get that money back. Pension is not passed on to your heirs; if you have a partner, he/she will receive a lower amount if you pass away after you've retired. If you don’t have a partner, the remainder is not passed on to other heirs. The same applies to children before they've turned 27. So check out your biggest savings pot and see if it would be enough for you.” The graph Reinier uses for his presentations shows that by the age of 86 or 87 all variants will have paid out the same total amount. “So it's basically just a different way of drawing from your own savings. We want to make people aware of that. And I call on everyone to start taking action.”

The new pension system
“I'd like to add something about the new pension system, which is going to be implemented in the not too distant future. It refers to personal pension pots, meaning there will be more awareness of the capital you’ve built up. Nevertheless, I don’t think people will suddenly be more aware of how many years it will take them to get their pension pot fully paid out. In the new system, the investment risks will be more obvious to everyone, but in order to be better prepared for this uncertainty, personal financial planning will be a must. So even in the new situation, it will be advisable to find out whether you'd be able to retire early. And whether you'd be able to afford that, of course.’’