The Dutch pension system is under pressure. Major causes are low interest rates, an aging population and the fact that people are living longer and therefore need to receive pensions for longer.

A future-proof pension system requires adjustments. One of these adjustments is the introduction of the Improved Contribution plan Act since September 1, 2016. Are you building up pension capital in the ARP/ASP plan, the defined contribution plan of Mars Pension Fund (MPF)? If so, since September 1, 2016, it has been possible to continue investing after your retirement date and receive a variable pension. MPF itself does not offer a variable pension, but you may purchase a (variable) pension with your pension capital from another administrator. You can read more about this in this report.

An additional choice: variable pension benefits

In the ARP/ASP plan, you build up pension capital. If you retire now, you use this capital to purchase a lifelong fixed pension. In principle, the amount of a fixed pension does not change. You will receive the same pension every month, possibly increased by a supplement once a year. There may be a reduction if the fund's financial position requires it.

Currently, you already have several choices on your retirement date. Since 1 September 2016, you have had an additional choice: you can opt for a variable lifelong pension.

How does the variable pension plan work?

On your retirement date, your capital is used to calculate how much pension you can buy for life. This pension is paid out over a period of twelve months. In the meantime, the capital will continue to be invested. Every year, the amount you can buy in for life is recalculated on the basis of the available capital and current life expectancy.

The amount of your pension can vary every year. In principle, the benefit is higher if there is a higher return. Of course, this also applies the other way around: the benefit will be lower if there is less return.

There is also another factor at work here. If it turns out that we live longer than initially expected, the benefit will be adjusted. If we live longer, the benefit will be lower. If we live shorter, the benefit will be higher.

What does this mean for you?

MPF itself does not (yet) offer variable pension benefits. However, Mars and MPF will investigate whether they will offer this in the future.

The ARP/ASP plan does offer 'shop right'. This means that you can use the ARP capital to purchase a fixed pension from MPF or to 'shop' with this pension capital. You can then buy a fixed or, if the pension provider offers it, a variable pension benefit from a pension provider. With the ASP capital you have to shop around anyway.

So for purchasing a pension you are not tied to MPF. The option of purchasing a variable pension benefit from an external party was also included in the ARP/ASP regulations as of September 1, 2016. Currently, several pension providers are in the process of implementing the variable pension benefit. So far, there is no administrator who is already offering the variable pension benefit. It is not expected that participants within the ARP/ASP plan will retire in the short term.