Four examples of (almost) retiring in the run-up to the new pension plan

With the new pension plan on the horizon, you may have questions about your own retirement. What options do you have, and when is the right time to retire? Unfortunately, we won’t be able to provide specific personal figures until the end of 2027. To give you an idea of how the new pension rules will affect the amount of your pension, we’ll use four participants who are (almost) retiring as examples. These examples are meant to provide an initial overview. In the coming period, we’ll continue to expand this page to further support you in making pension and retirement-related decisions as we transition to the new pension plan. 

 First, the following applies in all situations:

• The basic principle in the transition to the new system is that everyone will eventually accrue and receive a pension that is at least the same as, or better than what they expect now.
• You also have options, both now and in the future, to adjust your pension to your personal situation upon retirement. For example, you can choose to receive a higher pension initially and then a lower one, or exchange your retirement pension for a spousal pension, or vice versa. These options will therefore continue to apply under the new pension plan.

John (age 60) | Final Pay Plan member and plans to retire in mid-2027

John has been participating in the Final Pay Plan for many years while working at Mars. He plans to retire in mid-2027. This means that he will need to make decisions under the current Final Pay Plan in early 2027, while the new pension plan will not take effect until early 2028. He will not receive the first preliminary estimate of his benefits under the new plan until late 2027.

What should John keep in mind?

Missed Transition Compensation

If John retires during 2027, he will not be eligible for the transition compensation related to the pension plan changes that is provided to individuals who are still employed by Mars and actively accruing pension benefits. This compensation is available only to members who are still accruing benefits on January 1, 2028, and is based on factors such as age and the time remaining until retirement.

Active members in the Final Pay Plan receive compensation for the loss of certain guarantees under the current plan, including:

• The employer’s obligation to make additional contributions if needed to support the plan;
• The plan’s indexation provisions; and
• Pension accrual based on pensionable earnings at the end of a member’s career.

Additional Pension Assets for Retirees

If John retires in 2027, he may still receive additional pension assets in 2028 as a retiree to compensate for the loss of the plan’s indexation-related guarantees.

The amount of these additional pension assets will depend on the plan’s funded status at the time of the transition on January 1, 2028.

Henriëtte (66 years old) | Member of ARP/ASP plan and plans to retire in mid-2027

Henriëtte participates in the ARP/ASP Plan. She is planning to retire around October 2027. Because the new pension plan will take effect in early 2028, she will not receive the first preliminary estimate of her benefits under the new plan until late 2027.

What should Henriëtte keep in mind?

Missed Transition Compensation

If Henriëtte retires during 2027, she will not be eligible for the transition compensation related to the change from age-based contribution rates to a flat contribution rate, nor for the compensation provided to active MUP members for the elimination of interest credits under the ARP Plan.

These compensations are available only to members who are still actively accruing pension benefits on January 1, 2028. By that date, Henriëtte would already be retired.

Purchase of Retirement Benefits

Another factor to consider is that, under the new pension plan, retirement benefits will no longer be purchased from an external insurance provider. Instead, members will continue to participate in the Mars Pension Fund after retirement.

Fixed vs. Variable Retirement Income

Before January 1, 2028, Henriëtte can still choose a fixed retirement income through an external provider. Under this option, the monthly benefit amount remains stable for a long period of time, or potentially for life.

After January 1, 2028, retirement benefits provided through the Mars Pension Fund will automatically be variable. This means that benefit payments may increase or decrease over time, depending on investment performance and other financial developments.

Hulya (60) is partially retired

Hulya participates in the Final Pay Plan. She is 60 years old and began receiving half of her pension benefit several years ago. She is still deciding when to start receiving the remaining half of her pension and whether to do so before or after the new pension plan takes effect.

What should Hulya keep in mind?

Missed Transition Compensation

If Hilda chooses to commence the remaining half of her pension before 2028, she will not be eligible for the transition compensation related to the pension plan changes for employees who remain actively employed by Mars.

This compensation is available only to members who are still accruing pension benefits on January 1, 2028, and therefore applies only to the portion of Hilda’s pension that she is currently still accruing. The amount of this compensation depends on her age and the time remaining until her retirement date.

Additional Pension Assets for Retirees

If Hulya fully retires before 2028, she may still receive additional pension assets in 2028 to compensate for the loss of the plan’s indexation provisions and future indexation opportunities.

The amount of these additional pension assets will depend on the plan’s funded status at the transition date of January 1, 2028.

Changes to Early Retirement Eligibility

Under the new pension plan, members may generally begin receiving pension benefits no earlier than ten years before their State Pension Age (AOW commencement date).

Because Hulya is 60 years old and is already within ten years of her State Pension Age, this change does not affect her. She may choose to commence the remaining portion of her pension under either the current plan or the new plan, subject to the applicable plan rules.

Henk (55 jaar) | Neemt deel aan de Eindloonregeling en wil zo snel mogelijk met pensioen

Henk participates in the Final Pay Plan. At age 55, they would like to retire as soon as possible. However, with the new pension plan approaching, they have learned that they will not receive the first preliminary estimate of their benefits under the new plan until late 2027.

What should Henk keep in mind?

Missed Transition Compensation

If Henk retires before 2028, they will not be eligible for the transition compensation related to the pension plan changes for employees who remain actively employed by Mars, just like John.

This compensation is available only to members who are still accruing pension benefits on January 1, 2028. The amount of the compensation depends on the member’s age and the time remaining until retirement.

If Henk retires before 2028, they may still receive additional pension assets in 2028 to compensate for the loss of the plan’s indexation provisions and future indexation opportunities. The amount of these additional pension assets will depend on the plan’s funded status at the transition date of January 1, 2028.

Changes to Early Retirement Eligibility

Another important change applies in Henk’s situation. Under the new pension plan, members may generally begin receiving pension benefits no earlier than ten years before their State Pension Age (AOW commencement date).

For example, if Henk’s State Pension Age is 67 years and 9 months, they may already be eligible to start receiving pension benefits under the current plan. Once the new pension plan takes effect, however, Henk may need to wait longer before becoming eligible to commence pension benefits.