Remind me, why a new pension system?

In the coming months, the pension system will once again be in the spotlight. With elections approaching, pension funds are also preparing for a major step: moving old pensions into the new system. That raises questions. Why was it, again, that the pension system had to change?

For many people, the original arguments have faded into the background. Yet they are essential for today’s debate. One of the main triggers was the declining trust in the old system — and that had several causes:

1. An opaque system
Participants often had little clarity about what pension they could actually expect. Technical jargon like “funding ratio” and “discount rate” made it hard to follow, and the link between the contributions paid in and the eventual pension benefits was unclear.
Many people had no idea what was happening with their pension contributions — or whether their pension was still secure.

2. No growth, even in good times
Strict rules and years of low interest rates meant that funds were unable to raise pensions for a long time — even when the economy improved. As a result, retirees’ purchasing power came under pressure.
Retirees felt stuck, while their everyday expenses kept rising.

3. Fear of cuts
After the 2008 financial crisis, there was frequent talk of possible pension reductions. This created uncertainty — all the more so because, at the same time, the pension funds still held billions in assets.
Trust plummeted: participants felt unheard and unprotected.

4. Young paying for old
In the old system, younger participants paid relatively high contributions for relatively little pension accrual, while older workers benefited more. As careers have become more flexible — with people switching jobs more often — that redistribution has become increasingly hard to justify.
Young people began to wonder whether there would be “anything left in the pot” by the time they retired.

5. Survivor’s pension poorly understood
The survivor’s pension — the benefit paid to a partner after someone’s death — was arranged differently in each fund and often highly complex. Many people did not know whether their partner was entitled to a payout, or how much it would be. In some cases, eligibility only applied after years of service, which could lead to painful situations in the event of a sudden death.
Many people simply assumed it was well arranged — but that was far from always the case.

And that’s why the pension system had to change!
The old system was built on stable jobs, stable interest rates, and stable relationships. But society changed, with more flexibility in both work and personal lives than the old system could handle. The new Pension Act (Wtp) addresses that problem.