The cabinet is planning to introduce a new personal pension system by 2020 which will provide more choice, junior social affairs minister Jetta Klijnsma said on Monday.

The cabinet also plans to dismantle the current ‘average premium’ system where all employees pay the same pension contribution and build up the same pension each year.

Klijnsma thinks this is unfair because the contribution of young people earns interest for longer than that of older people, meaning they contribute more to the overall pension pot.

The minister sent the new plan in a written statement to parliament on Tuesday. Cabinet, parliament, employers and trade unions will fill out the plan over the next few years.

‘The pension system needs to be simpler, explainable and under the control of the contributor,’ Klijnsma said in her statement.