Finance

Good news for retirees this year: they are improving

This is apparent from data from the ADP, a company that does payroll for other companies. From that position, ADP can pretty accurately predict what an average paycheck looks like at the start of a year. Only salary increases due to a collective labor agreement for a certain sector are not included in the figures.

A little salary

The data from competitor Visma Raet already showed yesterday that workers are making little progress this year at the bottom of the line. Despite historically low unemployment and the glaring shortage of staff, little will change on your pay slip.

There is good news for retirees, according to the data from ADP. Due to tax cuts and because the contribution to the health insurance act has been slightly reduced, there is more left at the bottom of the supplementary pension. Every employee accrues this through pension funds and is separate from the AOW benefit that every Dutch person receives from 66 years and seven months.

Euros there

A pensioner with 500 euros gross in the month of supplementary pension will gain 1.35 euros net, someone with 2,500 7 euros, ADP calculates. Last year, pensioners held the bottom line just less about of their supplementary pension.

Retirees even benefit twice, according to the company. The AOW will increase this year by 18 euros per month for a single person, those who live with someone who also receives AOW will receive 13 euros more per person, reported the Social Insurance Bank mid-December.

And then there is even more positive news in the barrel for retirees. Thanks to the sharp rise in stock prices worldwide, pension funds are in very good shape, reports the Financieele Dagblad. The coverage ratios, that indicator of how well a fund is doing financially, are at the highest level in about six years, the newspaper reports.

Increase pensions

And that means that for the first time in years it is possible for many pension funds to increase their pensions, in other words indexation. That means that benefits are increased to compensate for the rise in prices. This is not a superfluous luxury, given the current high level of inflation.

In this video, Carien ten Have explains how it is possible that everything has become more expensive:

Not only the good results on the stock market make it possible for funds to increase pensions. Retired people are also being extended a helping hand from the political perspective of The Hague.

Rules relaxed

The limit for when funds are allowed to index pensions will be lowered. Instead of 1 euro and 10 cents in cash for every euro that a fund has to pay out in the future, in the future there only needs to be 1 euro and five cents in cash.

This proposal by the PvdA can count on the support of a majority in the House of Representatives. It is not yet known when the proposal will be voted on. That depends on when the new cabinet sends the bill to reform the pension system to parliament.

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