What if economic developments are favorable or adverse?

What happens with your pension in the event of long-term economic growth or if there is a downturn?

You can see this estimate from this year for the first time on your Uniform Pension Statement (UPS). This was already visible from the end of last year on mijnpensioenoverzicht.nl.

The estimate of your pension at PDN on your UPS shows you the effects of any future economic growth or downturns. This is presented in an image with three arrows that start together from one point. The bottommost amount is not an estimate. This is the pension you have accrued so far at PDN. The top three are an estimate of the pension you are likely to receive depending various situations.


What does this estimate look like?

You see the estimate of your pension with three arrows that start together from one point. An example is given below.

UPO illustratie EN PDN.PNG (30 KB)

The bottommost amount
The bottommost amount is the pension you have accrued so far. If you were to stop accruing pension now, this is the gross amount that you would receive per year for as long as long as you live. This amount is calculated on mijnpensioenoverzicht.nl as though your pension starts at the same time as your statutory old-age pension (AOW).

The upper amounts
At the top you see three amounts. These amounts are an estimate of the pension you are likely to receive in various situations. An important assumption for all three amounts is that you continue to work until the PDN retirement age, and you continue to accrue pension within the current pension scheme. If you stop working earlier, your pension will be lower.

Many different future scenarios have been devised by economists. In one future scenario things go well as far as interest rates, investments and price increases are concerned. In another future scenario, the outlook is less optimistic. All pension funds and insurers make their calculations using these same future scenarios. We have calculated how high your pension will be in these future scenarios.

  • The expected end result
    You see this in the center at the top. This is the pension that you are likely to receive as things are at the moment. There is currently a 50% chance that the pension will end up being lower and a 50% chance that the pension will end up being higher than this amount.

  • If the economy grows
    The right-hand arrow shows the amount you will probably receive if things go very well with the economy. The likelihood is currently low (5%) that you will receive a higher amount than the amount on the right.

  • If there is a downturn
    The left-hand arrow shows the amount you will probably receive if things go much worse with the economy. The likelihood is also currently low (5%) that you will receive a lower amount than the amount on the left.

What are the causes of a favorable or adverse result?
  • Interest rates
    If interest rates increase, we do not need to hold as many reserves for the future and the likelihood is higher that we can increase the pensions. If interest rates fall, we will need to hold higher reserves. The likelihood that we can increase the pensions will then be lower.

  • Investments
    We invest for your pension. We need to do this because saving alone would not result in sufficient funds to pay for all pensions now and in the future. But investment is not without risks. We cannot predict investment yields exactly in advance. There could be a period with low yields or even losses on investments. In the latter case, it is possible that we will then need to reduce the pensions.

  • Increasing or falling prices
    If prices increase, your pension will have less value. That’s because, if you have to pay out more, your pension won’t go as far. Our estimate includes the effects of prices on what you will be able to purchase with your pension in the future. The amount that you are expected to receive is, therefore, a corrected amount. If the expectation is that prices will increase, the amount will be adjusted downwards accordingly.

What is the difference between PDN’s UPS and Mijnpensioenoverzicht.nl?
For the first time, the Uniform Pension Statement (UPS) that you receive from us this year shows you the estimate of your pension in the event of economic growth or downturn. It gives you an estimate of the pension that you will receive from PDN. When you log onto mijnpensioenoverzicht.nl you see an estimate based on your total pension, which also includes any other pension funds and your statutory old-age pension.

Have you already retired?

If so, mijnpensioenoverzicht.nl also presents an estimate of your pension in the event of growth or downturns in the coming ten years. You can see this estimate as soon as you start receiving your statutory old-age pension (AOW). Until you receive your statutory old-age pension (AOW), you will see your pension as though this starts at the same time as your statutory old-age pension.

If the expected end result is lower than the amount that you receive now, this means that economists are expecting the prices to increase and the purchasing power of your pension to fall. This does not mean that you will receive less, but you will not be able to purchase as much with the same pension. With the anticipated end result, you can calculate how much you will be able to purchase with your pension in ten years.


Are the scenarios a consequence of the pension agreement?
No, presenting scenarios is a new way of communicating about the pension that you are accruing via the current pension scheme.

I see new amounts. Has my pension scheme changed?
No, the scheme hasn’t changed. You are looking at an estimate based on the current scheme.

What should I do with my estimated pension amounts?

You can use the middle amount to estimate whether the expected pension is enough for your living expenses. The other two amounts indicate the direction in which your pension can develop if things go very well or very badly with the economy.

Your pension will never suddenly be equal to the amount on the left. If the economy takes a downturn for a longer period, the expected pension (the middle amount) will reduce gradually. It is therefore good to check your pension every now and then (for instance each year). You can then see the direction in which your pension is developing.


How likely is it that I will receive the lowest amount?

In 5% of the calculated future scenarios, the calculation resulted in an amount lower than the predicted downturn amount. The likelihood that you will receive the lowest amount is very small. The likelihood that you will receive more than the lowest amount is 95%.


How likely is it that I will receive the middle amount?

The average outcome can be seen the center at the top. There is currently a 50% chance that your pension will end up being lower. And there is currently a 50% chance that your pension will end up being higher. The likelihood that you will receive exactly this amount is very small. The main purpose is for you to see the direction in which your pension can develop if things go well or badly with the economy for a longer period.


How likely is it that I will receive the highest amount?

In 5% of the calculated future scenarios, the calculation resulted in an amount higher than the amount predicted if the economy does well. The likelihood that you will receive the highest amount is very small. The likelihood that you will receive less than the highest amount is currently 95%.


What does “if the economy does well” mean?

If the economy does well it means that the economy is growing much better than expected. It is a possible future scenario in which the returns on investments are higher than expected. Interest rates increase and prices do not increase or even fall. We do not know whether this situation will occur. But if this situation does occur, the right arrow shows what effect this will have on your pension.


What does an “economic downturn” mean?

An economic downturn is when the economy does much worse than expected. It is a possible future scenario in which the returns on investments are lower than expected. Interest rates are lower than expected and prices increase more sharply than expected. We do not know whether this situation will occur. But if this situation does occur, the left arrow shows what effect this will have on your pension.


Is there a chance that I will receive less than the lowest amount? Or more than the highest amount?

Yes, there is a chance that this could happen. The three amounts are calculated based on 2000 possible future scenarios. We have calculated your pension in every scenario. In 5% of these scenarios, your pension ends up being lower than the amount you see on the left. In 5% of the scenarios, your pension ends up being higher than the amount you see on the right. Right now, it looks as though there is a 90% chance that your pension will end up at an amount between the amounts on the left and right.


Why is the surviving dependent's pension not shown if the economic developments are favorable or adverse?

The government has decided to only show what will happen to your own pension if the economic results are favorable or adverse.