The Dutch government's coalition agreement is full of new ideas for the Netherlands. A new pension system is on the horizon. Prime Minister Mark Rutte’s third cabinet decided to accept the recommendations presented some time ago by the Dutch Social and Economic Council (SER) as the basis for a new national pension agreement. Reform of the Dutch pension system has become essential as life expectancy rises, interest rates remain low and the labour market evolves. The government wants everyone to have an adequate pension – including you and the generations after you. To keep pensions affordable, we will all have to prolong our working lives. The challenge for you is to find the work-life balance that's best for you, now and in the future.

Building up pension is compulsory in the Netherlands. That's not going to change. And we endorse that. You live in the present, and your pension seems a long way off at your age. Your age peers are not likely to be saving for a pension at their own initiative. That's why the government, your employer and you are required to contribute to your pension. All residents (and former residents) of the Netherlands are entitled to a Dutch state pension (AOW). Employees also build up pension in their employer's pension plan. This means you are currently building up two pensions. Changes in legislation or in your own life will have an impact on your pension.

Risks have shifted
Pension plans are rationalising to ensure that everyone’s pension will be adequate. The risk of a pension deficit has been shifted from the employer to the employee. Your pension might not be enough to maintain your current lifestyle when you retire. We're not saying your pension is in danger, but you do need to take action and at least know what your pension is worth.

What action can you take now?
Having just started your career, lots of options are still open to you. Some tips:

• Discuss the topic of pension at home and at work. Compare different pension plans using Pension 1-2-3.
• Check which events in your life will have an impact on your pension and take action where necessary.
• Check your Uniform Pension Overview (UPO) to find out your tax-exempt amount, ‘factor A’, which you can use to purchase annuities as a supplement to your pension.
• Deposit your salary raises into a savings account for your retirement.

Pension and career moves
Do you think you’ll be working for the same employer for 45 years? Young people tend to switch jobs more often. Has loyalty come to an end and is it time for a new career model? We don't think so. A recent survey among young workers revealed that less than a quarter of them want to hop from one job to the next. However, many of them do see their first job as a stepping stone. 45% considers switching to a new job after two years, while 25% stays with their first employer for four years to gain experience. Young workers are ambitious and flexible, but also tend to be more demanding than their older colleagues. They expect their job and their employer to match their personality, their interests and their private situation. Working part time is increasingly normal. Those seeking a work-life balance will find it easier to prolong their working lives. And that’s exactly what the government is aspiring.

“Five years from now, I’ll be ready for a new challenge! A new job, new surroundings, perhaps a raise. How will that affect my pension?

New contracts
Job hopping is not always voluntary. Organisations change. Work is increasingly done in projects, with flexible workers on temporary employment contracts. Permanent contracts are no longer the norm. Switching jobs has an impact on your pension. Your new employer might offer a pension plan that builds you less, or more, pension. So if you’ve changed jobs, think about whether or not you want to transfer your pension. Ask your employer to give you relevant information. The government has just passed a new law regarding the automatic transfer of small pensions, in order to reduce the number of pension plans per employee.

What are your options?
The new pension system might present more opportunities for making choices that tie in with your personal situation, whether you’re still working or already retired. Options might include using your pension contribution to pay off your mortgage or joining a pension plan voluntarily as a self-employed worker. The future will tell. The question is, will we make such choices? Research shows that we find it difficult to make choices when the benefits won’t materialise for many years yet. People tend to postpone decisions and want to enjoy benefits now rather than later. But if you’re working for a career, you're also working for a pension. If you think about your pension every time you take a career step, you’ll know exactly what your pension savings are worth. The Pension Planner will help you.

This article provides an outline of trends in society as well as some general information. Would you like to read stories of employees in other age groups? Select at the upper right corner of your screen.