Explanation of the Uniform Pension Overview
As a participant in a pension scheme executed by LifeSight and elipsLife, you will receive your Uniform Pension Overview (UPO) from LifeSight every year. Below follows more information about what you can find on your UPO.
Your pension scheme at LifeSight
Your pension scheme at LifeSight is a defined contribution scheme. In a defined contribution scheme, your employer makes a contribution available to you, with which you accrue a pension capital. In addition to the contribution from your employer, you can often voluntarily make additional contributions for your own account. You can see whether this is possible in your scheme on MijnLifeSight (for example in your Pension 1-2-3 or in the pension rules).
The pension capital is invested until your retirement date. On your retirement date, you use this capital to purchase a pension (retirement pension and possible partner’s pension) from an insurer. The amount of your pension depends on:
- How much contribution has been paid?
- What is the return on your investments?
- What is the interest rate on your retirement date?
- What is the average life expectancy on your retirement date?
The amount of your pension is therefore not fixed.
Insurance with elipsLife if you pass away before your retirement date
In addition to the accrual of pension capital, your pension scheme includes insurances in the event of passing away. These insurances are executed by elipsLife. You are eligible for these insurances if you are employed by an employer that has chosen LifeSight to execute the pension scheme. These insurances end when you leave employment.
What’s on your UPO?
Your UPO gives an overview on 1 January of:
- Your accrued pension capital
- An estimate of your pension to be purchased on your retirement date, based on:
- An expected scenario
- A pessimistic scenario (if there is a setback)
- An optimistic scenario (if there is a windfall)
- The insured pension for your partner and children if you pass away before the retirement date
- An overview of the development of your accrued pension capital
- The premiums and costs for your pension paid in the previous calendar year
- The factor A (for a gross pension plan) or the annual margin (for a net pension plan). You need this information to calculate the available space for additional pension accrual with life annuities.
Below we provide more information about these components.
1. Your accrued pension capital
This is the value of your accrued pension capital in your LifeSight pension plan. On MijnLifeSight you can see in which funds we invest for you. On MijnLifeSight you can also make a change in your investments. To do this, go to the Pension Planner or to My investments. You can also find more information in the brochure Pension Investments at LifeSight. This brochure can be found on MijnLifeSight, section My documents.
2. Estimation of your pension to be purchased
On your UPO you will find an estimate of the amount of your pension on your retirement date. This estimate is based on the so-called Uniform Calculation Method (URM). This method has been made mandatory by the Dutch government since the end of 2019. In the URM, 2,000 scenarios are used for the (development of) price inflation, the returns on your investments and the interest rates. The scenarios can be adjusted quarterly and are published by De Nederlandsche Bank (DNB).
Section “What can you expect in terms of pension?”
On your UPO, the section “What can you expect in terms of pension?” shows an estimate of your pension to be purchased based on the URM. This is an expected amount per year, calculated on the basis of 2,000 scenarios. In each scenario, the calculations take into account the return on your investments and the interest rate as included in DNB’s scenario set. Also possible future contributions are included. The calculations do not take into account an increase in your wage and prices in the future.
Section “What if there are windfalls or setbacks?”
Further on in your UPO you will find the section “What if there are windfalls or setbacks?”. This includes an image as in the example below:
The amount under the arrows is the expected pension that you will be able to purchase with the capital that you have accrued up to 1 January. This amount is equal to the amount in the section “What can you expect in terms of pension?”.
The image also shows 3 other amounts: an expected outcome, an outcome if there is a setback (pessimistic scenario) and an outcome if there is a windfall (optimistic scenario). In the calculation of these 3 amounts, an increase in your wage and prices in the future has been taken into account. Both the increase in your wage and the increase in prices are based on the scenario set published by DNB. The increase in your wage has consequences for the amount of any future contributions (if you are still employed by your employer with a pension scheme with LifeSight). And by taking into account an increase in prices, the 3 amounts above the arrows therefore indicate the purchasing power of your pension. This contrasts with the amount under the arrow, which does not take price increases into account.
Pension on MijnLifeSight
On MijnLifeSight we also show an expected, pessimistic and optimistic pension outcome based on the legal method (URM).
Although both MijnLifeSight and the UPO are then calculated using the URM method, there are also differences as a result of which the amounts shown on your UPO will not be the same as the amounts on MijnLifeSight. The causes of these differences are explained in the table below:
| The pension income is calculated based on: | UPO-section “What can you expect in terms of pension? | UPO-section “What if there are windfalls or setbacks? | MijnLifeSight – legal method (URM) |
|---|---|---|---|
| Scenario sets for price inflation, returns and interest rates | DNB-set | DNB-set | DNB–set |
| The calculation date | 1 January | 1 January | Actual: The moment you log in, the calculation is made |
| Amounts per | Year | Year | Month |
| Taking into account price inflation up to your retirement date (during the accrual phase) | No | Yes | Yes |
| Taking into account price inflation after your retirement date (during the payment phase) | No | No | No |
| Tax taken into account | No | No | Yes |
| Taking into account an increase in wages | No | Yes, based on price inflation | Yes, based on price inflation |
3. The insured pension for your partner and children
Your UPO shows the pensions that are insured in case of passing way, which will then be paid to your partner and/or child(ren). These pensions are insured by elipsLife. You are eligible for these insurances if you are employed by an employer that has chosen LifeSight to execute the pension scheme. These insurances end when you leave employment.
4. An overview of the development of your accrued pension capital
Your UPO shows an overview of the development of your accrued pension capital. We show the contributions that were added to your pension capital in the previous calendar year. The costs that LifeSight has charged for the management of your investments are also shown. These costs have been deducted from your pension capital. And we show what the return on your investments has been.
If you transferred a pension accrued with another employer last year, this is also included in the overview.
5. The premiums and costs for your pension paid in the previous calendar year
Your UPO also shows the paid premiums and costs charged by LifeSIght to your employer in the previous calendar year. This concerns the premiums for the cover of death risk and disability risk. These premiums are paid by LifeSight to the insurer elipsLife. The administration costs charged are for LifeSight. We need it for the execution of the pension scheme. Think of the administration, creating and maintaining the portals, sending letters, and so on.
6. The factor A or the annual margin
Gross pension scheme
The factor A is a value that you need to be able to calculate your tax-free threshold for additional pension accrual with life annuities. You can supplement your pension with a life annuity. The factor A on the UPO is determined based on the pension contributions in the previous calendar year. You may need the factor A for your tax declaration in the coming year. So as an example: you may need the factor A on your UPO 2022 for your tax declaration in 2023.
Net pension scheme
If you participate in a net pension scheme, you will receive a separate UPO for the net pension scheme. On the UPO for the net pension scheme you see the symbol for the annual margin. Here we show the net pension contributions that have been paid in the previous calendar year. You need this information to be able to calculate the annual margin. This is the fiscal space you have for additional net pension accrual with life annuities. You may need the net contributions (annual margin) for your tax declaration in the coming year. So as an example: you may need the net contributions (annual margin) on your UPO 2022 for your tax declaration in 2023.