Cutting back the pension accrual rate is not the same as a pension cutback. The reasons behind these two issues are different and they affect different groups of participants.

Why is the pension accrual rate being cut back?
In 2021, your pension accrual rate will be lowered because the fixed pension contributions which had been agreed by the social partners for the year will not be sufficient to pay for the targeted pension accrual. The accrual rate is the percentage at which you build up pension in a given year. In 2021, the accrual rate of your old age pension will be 1.196% of your pension base instead of 1.784%. Your partner pension will accrue at a rate of 0.880% instead of the targeted 1.313%. Orphans’ pension is equivalent to 20% of partner pension.

The accrual rate in 2021 will be lowered due to low interest rates. Read here how this decision was made in 2020 and the implications of the decision, and see some examples of calculations.

Who will be affected by the cutback of the pension accrual rate?
Cutting back the pension accrual rate will only affect employees who are currently in employment (in terms of pension these are ‘active participants’), because pension contributions are made for them. This is not the case for former employees (i.e. employees who have left employment) and employees who have already retired (‘pensioners’). Upon their departure from the company and/or their retirement, their contributions were discontinued and their pension accrual ended. This means a lower pension accrual rate will not affect them. 

Why are pensions sometimes cut back?
If a pension fund's funding ratio is too low, the fund may decide to cut back pensions. In this situation, pension benefits (i.e. pensions already being paid out to pensioners) are lowered. On top top that, existing pension accruals are reduced. In other words, a pension cutback affects everyone: employees, employees who have left employment and employees who have already retired. Fortunately, this is not the case for ING CDC Pensioenfonds.