Three of the five big Dutch pension funds are increasing payouts next year but by a much smaller percentage than inflation.

Civil service giant ABP is raising its pensions by 1.84% in 2025 – the biggest rise of the top five funds. The fund, one of the biggest in the world, represents three million pensioners and workers.

Nevertheless, the increase is half that of the current rate of inflation, which reached 3.5% in October and rose again to 4% last month, according to national statistics office CBS.

ABP chairman Harmen van Wijnen said last week he was “half happy” with the increase but that this was all the fund could do given its financial position. “We would rather fully index link, but you have to strike a balance,” he said.

Healthcare pension fund PFZW has said it is freezing pensions next year, in preparation for the switch to a new pension system in 2026. It is crucial to be in a strong financial position before making the switch, the fund said.

Engineering fund PMT has also opted for a pension freeze, saying its current coverage ratio is not enough to allow an increase. Funds should have enough assets to cover 110% of their payout requirements.

Light engineering fund PME has scheduled a 0.3% rise while construction sector fund BFPBouw will increase its payouts by 0.75%.

Pension funds have three years to make the transition to the new system which is based on everyone having their own pension pot which they will be able to take with them when switching jobs.

Three funds, including the harbour workers fund, are switching next year.
The new system’s backers say it will benefit people with flexible jobs and shorter contracts in particular. It will also, they argue, be better for young people because they will not have to pay toward the higher pensions enjoyed by older generations.

On the downside, the new system is more vulnerable to stock exchange swings and there are no hard guarantees about the final payments.

The Dutch pension system is currently based on three pillars – the state pension AOW, compulsory corporate pension schemes – either sector-wide or company-based – and individual or private pension schemes.