The Dutch pension system

An article that, given the large number of reactions from VK readers (again in today's newspaper), has caused quite a stir. It is important for many older people that they have always assumed that the pension and its level - including adjustments to inflation and prosperity - were guaranteed and now that this appears not to be the case, they feel cheated, according to a number of the responses . In that light, the fact that it has now become a lot more insecure for the young people is only a small consolation.
Incidentally, under the heading 'fallacy 2' it is stated, among other things, that 'the angry over-60s only started contributing to their pension from the age of 25', which means that - still according to the article - claims along the lines of that there are 40, 45 or 47 annual premium paid, are 'pertinently incorrect'.
The certainty of that 'fallacy' is not justified in my opinion. With many pension funds you started participating in the pension fund and therefore paying premiums much, much earlier. In the government, for example, already at the age of 18, or even earlier if you became a professional soldier at the age of 16, for example.
I do not belong to the angry elderly, but that is mainly because with more than 42 pension years with the government I have an excellent supplementary pension. That it has not been indexed for many years and has actually been reduced once, that due to tax measures and the like, pieces of the net amount are constantly being nibbled off: I have not yet complained about it. So I'm not complaining, but I also refuse to be ashamed of my good pension – I worked for it and paid for it.

What prejudices!
In NL we have TWO old-age provisions: the AOW for every Dutch citizen, whereby 2% rights are accrued for every year between your 15th and 65th birthday, that you have lived in NL or social security costs there (e.g. as an expat on a voluntary basis ) have paid. This has been decided democratically and can therefore be changed democratically or even set to ZERO. When the average life expectancy was set up, it was only a few years, now 20 years. At the time, an increase in the state pension age had already been taken into account in the design, but that was not a popular measure that union officials and politicians could come up with, so… just move on, until the tide turns. Of course, one could also have said that after 40 years of work (from the age of 15 to the age of 55) you were allowed to receive state pension, but only, for example, half of the normal benefit (as, for example, in Gr).
Every working NL-er pays for this, for the DAN in the AOW, so every AOW-er has not paid a penny to his oh her OWN AOW.
The second system is partly voluntary: often made mandatory through collective agreements. Each participant pays a premium, with which the pension funds must try to make a return on this through lending, shares, etc. THEN the life expectancies and cost of living at that time were assumed. That life expectancy has now risen, so every pensioner benefits from it, but on which his own investment has never been based. In any case, the own contribution was only 20-25% of the benefit obligation, the pension fund had to make the rest in return. In the time when a return of 4-8% could still be achieved, it was easy to make promises, but now that those returns are 1`-2%, the whole expectation of the future will of course collapse like a house of cards. In addition, as much return as possible had to be made, because… the extra life expectancy had to be paid for. So.. lending to somewhat lesser securities: Greek government bonds (loans), etc. Will that outstanding money ever come back? Much has been channeled back to the pension funds with those so-called guarantees from Euro states. THAT are those EU loans to Gr, Pt, Sp etc.
So if those predicted returns are not achieved, or even part of the outgoing funds disappear in bankruptcies (eg Greece), a substantial part of those pension assets will disappear. That is why the Euro countries want to keep those Garlic states afloat.
So yes, the NL-er didn't even think about where his pension money was, never wanted to read the brochures and annual reports of the pension funds, and the politicians didn't want to tell them, because.. their only goal is re-election.

The story of BANKS is a completely different one: here too: maximum return, because.. the citizen wanted as much interest as possible on his savings, so.. take a little more risk = gamble.
That a seller of a bank (Groenink) received so much (yes, a bit much in my opinion) when selling ABN AMRO to a bunch of scammers at Fortis, among others: I ask everyone the following question: if someone can sell your house selling for 50% more if you yourself would have been satisfied, wouldn't you have loved to give that person 20% of that extra 50%?
I don't think it's wrong that the politicians are now doing everything they can to compensate for the mistake of Gr's admission by making the lent money as secure as possible.

Yes, a lot went wrong, but we were all there, could have read it all, but we preferred to believe our overpromising politicians.
Unfortunately, this also applies at the state level: making things worse. The Netherlands has spent €5 BILLION more in 120 years than it came in. What do you mean, BAD ECONOMY? You mean over-spent! . The common (=state) debt now stands at € 26.600 per head. During the elections that was € 24,600 per head, so € 2000 too much per NL citizen. Calculate per family of 4 people and compare this with your own situation: reason for a divorce! There will be an additional €888 per SECOND for the whole of the Netherlands. ( see http://www.z24.nl )
Your own fault, so big bump.

Dear fellow bloggers,
I have the story of Mrs. Hofs and it contains many incorrect interpretations. Under fallacy #1, she acknowledges that the elderly suffer the most, but it is possible because their income has risen more than that of working people and their assets are higher. In terms of percentages, it is very accurate: the median income of working couples (aged 47-57) rose by 1990% in the period 2010-18 to approximately € 45000 and that of pensioners by 26% to € 27000. (Source: IBO report of September 14, 2014: page 32). In Euros, the working couples therefore received € 6800 and the retired couples € 5500. Who benefited the most?
The story of the “rich” elder is also a fairy tale. The median wealth per household (without owning a home) in 2010 was € 35, 44, 45, 54 and 55 respectively in the age groups 64-65, 74-75, 12000-16000, 24000-26000 and 24000+ years. For the latter In three groups the house included € 120000, 135000 and 55000. (also source IBO page 24). On the one hand, the house is often difficult to convert into cash and the elderly prefer to continue living in their “own” home. On the other hand, it is wise for older people to have some assets. After retirement, they have on average 65% of the income of working people (See CPB Macroeconomic Explorations of 15/09/2013 page 91) and the washing machine also breaks down at some point in the elderly. The good news for the government is that the wealth position of the elderly will rapidly decline due to the threat of contributions to care homes. Notaries are currently working overtime to pass on the assets of the elderly to their children.
The attack on fallacy #2 (pension is deferred wages) also makes little sense. Pensions are based on the number of years worked and no work or no accrual means no pension. It is true that the life expectancy of the elderly has increased, but this is a development that started in the XNUMXs. A good pension fund regularly applies new mortality tables, anticipates these developments and regularly adjusts its premium calculations accordingly. It is therefore nonsense that a large part of current pensions are paid by those currently working.
I include the attacks on fallacies #3 (pension pots fuller than ever) and #4 (the low actuarial interest rate causes the shortages) together for convenience. The return on pension funds has fluctuated between 6 and 8% for years. Nevertheless, the pension obligations are calculated at their current value with an actuarial interest rate of approximately 2%. By applying such a low actuarial interest rate, the liabilities are kept high and the earning capacity of the assets is grossly underestimated. That 2 to 3% comes from risk-free investments in Dutch government bonds. I tell you that if a pension fund's asset manager arrives with such a return, he or she can pack the bags as of yesterday. Even today you can simply buy perpetual bonds on Damrak that provide a 6% annual return. How much of a farce the actuarial interest rate is is evident from the new pension system proposal in which an actuarial interest rate of 4.2% can suddenly be used.
And fallacy #5 (the government itself robbed the pension pots) is not complete. All large companies in the Netherlands also joined the raid. Despite sharply formulated objections from the Court of Audit, Lubbers et al still obtained enormous sums from the ABP. The same ABP that cut pensions by 0.5% this year. But thankfully that's less than my own pension fund which cut 2.3% this year and is likely to cut 7% next year. My pension fund also paid millions to the employer (distribution as dividend to shareholders) and reduced pension contributions under pressure from The Hague. Why not robbed from future pensioners at the time?
I will leave the other fallacies for what they are, but it should be clear that Mrs Hofs's story makes little sense. More important is the economic reality. Due to a xenophobic attitude of the population, the influx of immigrants has been held back and we now have an unfortunate population structure in the face of an economy that is too small. In the future, elderly people will be addressed in terms of income and/or assets. The mood for this has been carefully created, because last year the Social and Cultural Planning Office already published a report on how rich the elderly were and the aforementioned IBO report is full of options for getting money from the elderly. It is almost inevitable that all elderly people will have to believe it.
Rembrandt (64 years old)

I think most has been said by now. The discussion is mainly about emotions. What is clear is that the older generation has grown up with the idea of ​​'acquired rights'. People don't realize enough that you can't buy the future and that justice usually doesn't exist. That can work out to your advantage, like with my grandfather who never paid a penny of premium and suddenly just got state pension, but it can also work out to your disadvantage, if you're with the wrong pension fund, like now. The good thing about the discussion is that it is revealed that Henk Krol has very little understanding of finances, but he does understand emotions. Unfortunately, politicians are often responsible for matters they have (too) little knowledge of. Hence the gigantic confusion of tongues about the pension agreement, which is actually an AOW agreement.
Furthermore, I think, especially for the people on this blog, it's good to realize what a fantastic pension system we have compared to others, who, for example, were accidentally born in Thailand. Accept whatever happens to you and don't worry too much about it I would advise. Such a discussion is quite useful, but the emotions often stem from self-interest and a lack of empathy for others in a different situation.
Incidentally, I have yet to see that the current young generations with the necessary binge drinkers and McDonald's customers are rightly assigned such a high life expectancy.