The automatic transfer of inactive small pensions

Results
In 50 percent of the cases pension providers cannot transfer the small pensions because the person is no longer active as an employee. First, because 30 percent of people with a non-transferable small pension have no income from work. And second, because 20 percent is self-employed.

30 percent of the people with non-transferable small pensions no longer live in the Netherlands. 16 percent of all persons with non-transferable small pensions have emigrated from the Netherlands and 14 percent has worked in Netherlands in the past as a temporary migrant.

20 percent of all persons with non-transferable small pensions are active as employees. Half of them has a permanent job without pension accrual and I will probably not accrue pension in the future either.

The success rate of the automatic value transfer can be increased, firstly by repeat the transfer request. This is effective for about 10 percent of the entire group of people with a non-transferable small pension. Second, commute the small pension. This is effective for about 30 percent of all people with a non-transferable small pension. Third, to merge the small entitlement with the largest ‘inactive entitlement’. This is effective for about 60 percent of all people on non-transferable small pensions.

The research
Since 2019 it is possible for pension providers to automatically transfer small pensions to the pension fund in which the participant is accruing a pension. In 2020, a pilot was conducted to test whether it is possible to transfer all small pensions that arose before 2018 to the current pension provider of the person concerned. During this pilot it appeared that the ‘success rate’ of the automatic value transfer of small pensions is on average less than 50 percent. The Pension Federation and the Dutch Association of Insurers have asked SEO Economic Research to explain this low success rate.

Method
We collected the data of the 12 pension providers with the most small pensions that are not transferable. This data was linked to CBS-Microdata. With CBS-Microdata we analyzed the background characteristics of people with a non-transferable small pension. Based on these insights, we explained why the automatic value transfer was not always successful.