Time to align the target retirement age in the pension scheme with the state pension age
Publication date: 23 March 2025
The Dutch Future of Pensions Act (“Wtp”) aims to create a pension system that is simpler, more transparent, and easier for participants to understand. Yet in many pension schemes a fundamental source of confusion remains: the target retirement age (often set at 68) differs from the statutory state pension age (AOW age). This discrepancy not only confuses participants, but also creates legal and operational risks. The solution is straightforward: align the target retirement age in supplementary pension schemes with the moving AOW age. An administrator that takes this step supports the social partners and should also consistently translate this choice into products, life cycles, and operational processes.
For participants, the AOW age is the key societal reference point. It marks the moment when the basic state pension income begins and when many employment relationships effectively end. A different target age in the supplementary pension scheme—often still fixed at age 68—creates multiple “retirement dates” alongside each other: an AOW date, a target retirement date, and sometimes a contractual retirement date. This is difficult to explain and increases the risk of incorrect expectations, complaints, and claims. By linking the target retirement age to the AOW age, a single logical and recognisable anchor point is created. Under the Future of Pensions Act, the target retirement age in the supplementary pension scheme has, in practice, become irrelevant.
ABP demonstrates that such a link with the AOW age is entirely feasible. In both the current scheme and under the Wtp, the standard retirement age equals the AOW age, with the default assumption that participants retire when their AOW benefits commence. This regulatory choice provides clarity and consistency for participants.
That choice and linkage have an inevitable consequence: the target retirement date becomes dynamic. This is precisely where challenges arise in implementation. Many pension products and investment life cycles are still designed with a fixed age of 68. Investment risk is automatically reduced towards that fixed age, regardless of whether the actual target retirement date lies later. As the AOW age increases, a mismatch arises: participants shift into a more defensive investment profile earlier than necessary, potentially resulting in lower pension outcomes.
The argument is therefore twofold. First, explicitly link the target retirement age to the AOW age in order to provide clarity and reduce risks. Second, technically adapt products, life cycles, and operational processes accordingly. This means that the de risking path in the life cycle must move in line with the applicable AOW age of each individual participant. Achieving this requires adjustments in product design, investment policy, and IT systems, but it is essential to give substantive effect to the chosen framework.
The Wtp calls not only for new rules on paper, but for true consistency between pension scheme design, investment strategy, and execution. Any administrator that opts for the AOW age as the target retirement age must carry this choice through in full. Only then can a coherent, comprehensible, and future proof pension system for participants be achieved.
