New pension plan will bring about changes

With effect from 1 January 2014, employees of ING Bank will participate in a new pension fund: ING CDC Pensioenfonds. This pension fund will administer the new pension plan as from 1 January 2014, the “CDC pension plan” (Collective Defined Contribution). The new pension plan will bring about two major changes: pension accrual will be based on an average salary system (was final salary system) and risks will shift completely from the employer to the employees. To compensate for the risks, the employer will pay a risk mark-up on top of its contribution.

The new pension plan was one of the Collective Labour Agreement conditions agreed between ING and the trade unions in June 2012. Due to the major differences between the current and the new pension plans, it is not possible to have the current Pensioenfonds ING administer the new pension plan. This is why a new pension fund was founded.

How will this affect me?
Over the next few months, you will be receiving more information about how the new pension plan will affect you. 
The most important changes have been listed in the appendix. 

• A new pension plan, a new pension fund
• From a final salary system to an average salary system with an accrual ambition
• Defined contributions
• Pension indexation
• Shifted risks
• Standard pensionable age to go up
• What will happen to pension rights already accrued in the current fund?
• Two pension summaries in 2014
• The next steps for ING CDC Pensioenfonds
• More information

A new pension plan, a new pension fund

As part of the separation process of Insurance/IM, two pension funds have been founded, which will administer the CDC pension plan for ING’s employees as from 1 January 2014. On 2 October 2013, a new pension fund was founded for employees of ING Bank and a new pension fund was founded for employees of ING Insurance and ING Investment Management. Due to the major differences between the current and the new pension plans, it is not possible to have the current Pensioenfonds ING administer the new pension plan. The new pension funds have been named ‘CDC’: ING CDC Pensioenfonds and NN CDC Pensioenfonds Pensioenfonds to help clarify that the new pension plans are being administered by new pension funds.

From a final salary system to an average salary system with an accrual ambition

ING Bank currently has in place a final salary system for your fixed income, combined with an average salary system for parts of your variable income. As from 2014, we will have only one system. Starting on 1 January 2014, your total annual income will accrue pension under an average salary system as long as you stay employed by ING Bank. Your annual pensionable income (i.e. income that accrues pension) will increase by more than €5,000 per year. This is because the level of your income that does not accrue pension will be lowered to € 15,000. Under the current final salary system, this level was set at € 20,316. Our ambition for annual pension accrual is 2%, which means that, provided the annual contributions are sufficient, ING CDC Pensioenfonds can accrue pensions at 2% per year.

Defined contributions

ING Bank will pay an annually defined contribution to ING CDC Pensioenfonds. ING Bank and its employees will pay for this contribution together. More information about this will be published in My HR later this year. Provided the annual contributions are sufficient, ING CDC Pensioenfonds can see to it that your income accrues pension at 2% per year. This is what we refer to as our accrual ambition. Our calculations project that the contributions will be sufficient to allow your annual income to accrue pension every year.

Pension indexation

ING CDC Pensioenfonds invests the contributions and uses the return on these investments to realise its accrual ambition and enable payment of your pension when you retire. In addition, the return on investments is used to fund indexation of your pension. Indexation is important because it will ensure your pension’s spending power is maintained. One of the sources of funding for future indexation is the return on investments made by the fund. This means that ING CDC Pensioenfonds will be funding indexation instead of your employer, who funds indexation under the current pension plan. As a result, the amount of the indexation, if granted at all, will be entirely dependent on the financial position of the fund itself, rather than on the financial position of ING Bank. This is a major change. When determining the defined contribution, the risk mark-up and the expected return on investment combined is set at a level that ensures 80% likelihood for indexation. This is what we refer to as our indexation ambition.

Shifted risks

However, results may be disappointing: contributions may be inadequate or return on investments may fall below expectations. As a result, accrual and indexation of pension will be lower than envisaged. There is even a risk that the defined contribution is insufficient to cover the 2% accrual of your pension. This is why we use the terms ambition and indications when referring to pension. You won’t know how much pension you’ve got until you actually retire and your pension benefits are paid out. Even the ambition to pay out a certain level of pension to participants who have already retired isn’t always feasible. If the fund’s performance fails to meet the envisaged ambition or if its financial position falls below expectations, the employer will not make additional contributions, which it does do under the current pension plan. On the other hand, all of the contributions paid to ING CDC Pensioenfonds will be kept by the fund and will not be repaid to the employer, which the current fund does do. By paying its annual contribution, the employer will be completely discharged of its pension commitment. As compensation, the employer will pay a risk mark-up on top of its contribution. This is another major change in comparison with the current plan.

Standard pensionable age to go up

Under the current system, you build up pension until you turn 65. The accrual ambition for the new pension plan is based on a standard pensionable age of 67. All employees are allowed to retire early as from their 60th birthday, in which case accrued pension rights are calculated to correspond to the employee’s chosen date of retirement. If you’ve been employed for a long period of time and a large portion of your pension has been accrued under the current system, which is based on retirement at the age of 65, your pension will not be seriously affected if you decide to retire at the age of 65.

What will happen to pension rights already accrued in the current fund?

Pensioenfonds ING administers the current pension plan for employees of ING Bank and ING Insurance and ING Investment Management. On 1 January 2014, pension rights will no longer accrue in this fund and the policy for indexation of these rights will change. As long as you stay employed by ING Bank, these pension rights will be increased by the same percentage as the salary increases that have been agreed under the Collective Labour Agreement. However, they will not be increased in line with individual salary increases, as pension accrual will no longer be linked to your salary.

If you leave employment after 1 January 2014, you become a former participant. Your pension accrual in Pensioenfonds ING will be eligible for conditional indexation based on the price index, which will be maximised at 3%. This indexation is dependent on funding by the employer. In addition, ING will continue to be under a duty to pay supplemental contributions if Pensioenfonds ING’s financial position falls below expectations.

Two pension summaries in 2014

With effect from 1 January 2014, you will be participating in two separate pension funds: Pensioenfonds ING, administering the current pension plan, and ING CDC Pensioenfonds, administering the new pension plan. This also means you will be receiving two pension summaries in 2014 (Universal Pension Overviews, or UPOs).

The next steps for ING CDC Pensioenfonds

As a first major step, ING CDC Pensioenfonds has been founded. The next step will be for the fund to start up its administration, its asset management, its consultation procedures and its communication systems to take effect on 1 January 2014.

More information

More information is available in My HR. Over the next few months, you will also be receiving more information from ING CDC Pensioenfonds. If you already have any questions concerning your pension, just call the Pension Desk at

088 - 1162 411 or send an e-mail to pensioenloket@ing.cdcpensioen.nl.

Notice: This is an English translation of the Dutch text ‘Nieuwe pensioenregeling brengt verandering met zich mee’. The original Dutch text is leading.