The financial services regulator AFM says junior finance minister Frans Weekers is much too optimistic about the impact of changes to the pensions system on young workers.

Weekers said last week that people will still be able to build up a pension equivalent to 70% of their last-earned salary. However, in practice this will never happen, the AFM said in a briefing to parliament.

Weeker’s calculations are higher than ‘calculations based on the actual situation’, the AFM said. The briefing comes ahead of Monday’s parliamentary debate on the changes.

Tax-free

At the moment, workers can put up to 2.25% of their gross salary tax free into a pension scheme but the government is reducing that to 1.85%.

This means, says the AFM, that youngsters will build up a much smaller pension pot. Pension funds also expect younger workers to be hard hit and say Weekers is over-confident about the impact of the cut.

The pension fund federation ‘regrets’ Weekers’ decision and pension fund APG says it has ‘serious questions’ about the plan. Weekers’ projections will only be realised in a perfect world by a perfect pension fund, APG says.

Retirement

For example, Weekers’ figures assume a worker turning 25 now will be in continuous work until he or she is 71.

Most people currently build up a pension over less than 30 years. This is because many people have a spell without work or in a part-time job and spend periods spent as self-employed.