Moving with the economy
Up and down faster: how does that work?
A pension that we can increase faster sounds good. But what if the economy does badly? Do you then suddenly get less money? Siert Vos is Manager Strategic Advice at Pensioenfonds PGB. He answers questions about how pensions move with the economy.
Watch a 2‑minute video to see how moving with the economy works
Will my pension go up or down every month?
Are you not retired yet? Then your personal pension pot moves with the economy each month. If the economy does well, your pension pot grows. If the economy does badly, its value goes down.
Do you receive a pension? Then you receive the same amount for a full year. At the end of each year, we set the amount for the next year. That amount then stays the same for a whole year, just like now.
Can my pension suddenly become much lower?
We have made the following arrangements to limit the risk of reductions:
- We invest with less investment risk when you are closer to retirement and when you are retired.
- Do you receive a pension? Then we spread investment results over several years. This helps good years cover bad years.
- There is a reserve pot. We use this to top up pension payments if we would need to reduce them.
Does the economy do badly for a long time and is there too little money in the reserve pot? Then your pension payment may go down.
How does the reserve pot work?
We use the reserve pot if we would need to reduce pensions. We then take money from the reserve pot to top up the payments. As long as there is enough money in the reserve pot, pensions stay the same.
Can my personal pension pot run out?
No. Are you retired? Then you receive your pension every month. Even if you live to be 120.
Can the reserve pot run out?
When we move to the new pension, we fill the reserve pot. We expect to put 3% of the pension assets into it (with a coverage ratio of 106% or higher). This helps prevent reductions for a longer time. If the economy does well, we add money to the reserve pot. If it does badly, we take money out. We are not allowed to empty the reserve pot all at once. This helps keep money in the reserve pot to absorb setbacks. If the economy does badly for a long time, the reserve pot may become too small to prevent a reduction. For example, during a long and deep recession.