News archive
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
I work at ING
My pension has started
I worked at ING
Less pension accrual in 2021
12-11-2020
As a result of persistently low interest rates, the pension accrual rate will have to be lowered in 2021, just like it was in 2020. This means that next year, employees of ING will not accrue pension at 1.784% but at 1.196%, which means a cutback of 33%. This reduction will only apply to 2021.
ING CDC Pensioenfonds aims to have pensions accrue at the maximum rate allowable under Dutch tax law. Based on the situation as at 30 September 2020, the fund has assessed whether the 31.5% contribution agreed by the social partners will be sufficient to fund the accrual rate targeted for 2021.
Accrual rate to be cut back by 33%
The assessment revealed that the contribution will not be sufficient to fund the maximum accrual allowable in 2021. As a result, the accrual rate of pensions will be reduced by 33% in 2021. The accrual rate targeted for 2021 was 1.784% of your pension base, but it will be reduced to 1.196%. The pension fund will send you information regarding your personal situation in the fourth quarter of 2020.
Important note: the media are reporting that there is an ‘exemption’ for cutbacks on pension benefits if the funding ratio is higher than 90%. That is not the same issue as the reduction of pension accrual that ING CDC Pensioenfonds will apply in 2021, just like it did in 2020.
Examples
Cutting back the accrual rate of your pension will have a direct impact on your pension. The sample calculations below will help you estimate how the cutback will affect you.
Firstly, you should be aware that:
- Your pensionable salary comprises 12x your gross personal monthly salary plus your personal allowance for retention of salary, your personal allowance with indexation, holiday allowance and 13th month.
- The maximum amount of pensionable salary for 2020 is € 9,175.90 per month. (The maximum amount for 2021 has not yet been announced.) Any salary you earn in excess of this amount does not qualify for pension accrual.
- The minimum amount of salary which does not qualify for pension accrual is called the ‘franchise’ (€ 14,167 in 2020; the amount for 2021 has not yet been announced).
- Your pensionable salary net of the franchise is your pension base.
Sietske (25 years of age)
Johan (46 years of age)
Evelyn (54 years of age)
Rob (61 years of age)
Get a grip on your pension
To find out more about ING CDC Pensioenfonds' financial situation, check the website for news and quarterly updates on funding ratios, investment results and developments in the financial markets.
Would you like to find out how to get a grip on your pension? Log into MijnPensioenoverzicht or the Pension Planner, check whether you pension is on track and find out what you can do to increase your retirement income.
Frequently asked questions
Will the fixed contribution for 2021 be sufficient to prevent a cutback of pension accrual?
On 30 September, the pension fund assessed whether the fixed contribution would be sufficient to fund the targeted pension accrual. Unfortunately, it won’t be sufficient. The pension accrual will be cut back by 33%.
What was the aimed accrual for my pension in 2021?
The pension plan provides for pension accrual at the maximum rate allowable under Dutch tax law. Every year, the pension fund calculates how much that would be. It was 1.784% in 2021. This percentage is largely dependent on interest rates.
What will be my old age pension accrual in 2021?
Your old age pension will accrue at a rate of 1.196% instead of the targeted 1.784%.
What will be my partner pension accrual in 2021?
Your partner pension will accrue at a rate of 0.880% instead of the targeted 1.313%. Orphans’ pension is equivalent to 20% of partner pension.
If I pass away while I am employed by ING, will the reduction of pension accrual impact partner pension?
In that case, your partner will receive partner pension based on the amount of partner pension you built up plus any additional partner pension you could have built up. The reduction of pension accrual has no impact on your future partner pension accrual.
Could the pension fund change its policy in order to prevent a cutback?
No, it cannot change its policy. The pension fund has no influence on market interest rates. It determines the pension accrual rate for 2021 based on contributions paid into the fund and the cost of pension accrual. The lower the interest rates, the higher the cost of pension accrual.
Could the employer increase its contribution in order to prevent a cutback?
No, it cannot. It has been agreed that the employer pays a fixed contribution into the pension fund. Your employee’s part of this contribution is 7.5% (in 2021). Moreover, the pension plan is a CDC fund, which means its participants bear the risks. In a CDC fund, the employer cannot make additional contributions when the pension fund’s financial situation declines. Conversely, the pension fund cannot return funds to the employer if the fund has a surplus.
How does the pension fund determine whether a cutback will be needed for the coming year?
Every year as at 30 September, the pension fund assesses whether the fixed contribution will be sufficient to cover the pension accrual targeted for the year ahead. Its assessment takes into account the composition of its participant base as well as market interest rates.
Will pension accrued in previous years be cut back?
No, the 33% cutback will only apply to pension accrued in 2021.
Will current pension benefits be cut back?
No, only pension accrued in 2021 will be cut back by 33%.
What about pension accrued after 2021?
If interest rates stay at extremely low levels over the next few years, pension accrual could be cut back in the years after 2021 as well.
Will I receive a personal message about the cutback?
Every year in early December, you receive a personal letter regarding your pension accrual for the year ahead. This letter is posted in your secure My Pension.
What can I do to enhance my pension?
Find out how much your pension is worth and take action if your pension isn’t as much as you’d like it to be. Log into ‘Mijn Pensioenoverzicht’ provided by the Dutch government or to the Pension Planner provided by your pension fund.
Share: