“The sooner you start building up a pension or saving money, the better.”

André Hollenkamp has just been reappointed for his third and last term as chairman of the ING and NN CDC pension funds. He’s looking forward to it. “There's so much in store for us, in addition to the important things on our table already... We’ll be migrating to a completely new pension system. The media are reporting on it every day. Every year, the Netherlands and Denmark take turns as the country with the world's best pension system. So the system in our country is quite good, and yet we need to change it.”

Different demographics
“The dynamics in our pension fund are different to those of most large pension funds. Our population consists mostly of employees who are still building up a pension in the fund. As we have relatively few pensioners, we’re what you call a young pension fund. In a way, we're a ‘start-up’. It's challenging and interesting to operate as efficiently as possible within the limitations of the regulatory requirements.”

Cost of pension accrual vs contributions for pensions
“The cutback of pension accrual has been a cause of concern among employees. They wonder why the cutback is needed and why the employer cannot be asked to make additional contributions. It's like this: at the end of every year, the pension fund assesses whether the contributions will be sufficient to fully cover the envisaged pension accrual. That was not the case in 2020 and 2021, mostly as a result of low interest rates, so we had to lower the pension accrual rate. 

As for asking the employer to make additional contributions: the pension fund is a so-called CDC fund. This means that contributions are fixed in advance by the social partners and that additional contributions are not allowed if it turns out that they will be insufficient to fully cover the envisaged pension accrual. On the other hand, the pension fund is not allowed to refund money if its financial position turns out better than expected.”

Social partners decide on conditions and contributions
“People sometimes think the pension fund determines the conditions of the pension plan or the level of the contributions. That is not the case. We are the administrator, the third party in the so-called pension triangle. The first and second parties, i.e. the employer and the trade unions, are the social partners. They negotiate and agree on the contributions and sign off on a pension agreement for a period of, for example, five years. As a pension fund, we have no say in these matters, but merely execute them.” 

Lots of important issues on the table
“One of the issues currently impacting employees’ pensions is low interest rates. Another issue is the cost of pension accrual. And then there's the new national pension agreement, which will introduce new conditions. All of that is going to take a lot of time, also because the social partners will be making new agreements. To me, it’s a fantastic time to be involved in pensions. The issues are technically very interesting, and it's a challenge to communicate them clearly and transparently.”

We were already one step ahead
“When you read about the new national pension agreement in the media, it's often about growing uncertainty and about the risk being shifted to the employees. We already went through that change when we started our new pension fund back in 2014. From that starting point, our communications have focused on pointing out that the risks and consequences of a low funding ratio or insufficient contributions are borne by the employees.”

The sooner the better
“Some people think you won’t get back from the pension fund what you save into it. That isn't correct, though, and I'm glad to see more and more people don't believe that any more. Just like it's becoming increasingly clear to people that interest on interest really adds up. The sooner you start building up a pension or saving money, the better. I'd like to point out that our new Pension Planner will be available online later this year. It shows you whether you're building up enough pension and whether you should set aside additional savings. It's very easy to use. I really hope everyone will take a look at it.”

You only live once, but…
“On another note... I’ve been a fan of behavioural economics for years. As such, I sometimes meet with a guru in this field: Daniel Kahneman. I asked him about procrastination, the fact that people see far-away issues as disproportionately unimportant. ‘Hyperbolic discounting’ is what it's called. I asked Daniel, who is 85, how to deal with that. All he said was, ‘Default.’ Simply set aside an amount, 10% for instance. Never wonder why, just do it. 

And his second tip was: ‘If you're used to having a salary of, say EUR 3,000 a month and it’s raised to EUR 4,000, set aside that extra EUR 1,000. After all, you were doing fine with EUR 3,000. Those savings will mean a huge relief later in life.’ Of course, I understand that it's very tempting to spend that extra money. The notion that you only live once.... But don’t forget to think about the future.”