Legislative process national pension agreement
In 2019, social partners in the Netherlands agreed on a change of the pension system. In March 2022, the main legislation was sent to parliament. We can therefore inform you more elaborately on the changes up hand.
The pension agreement of 2019 included multiple aspects, such as the change of the pension system and creating a sustainable work force. The current legislation focusses on the change of the pension system. The legislation is planned to be in force as of 1 January 2023 (but may be delayed due to the ongoing legislative process) and employers have to change the pension plan before 1 January 2027. The main aspects of the legislative proposal are (1) all pension plans should be defined contribution and (2) the survivor’s pension should be dependent on the pensionable salary and is independent on years of service. Please find below the necessary changes for each situation.
Pension plan at a mandatory industry-wide pension fund
The employer can await the decision made by social partner’s in the industry.
Defined benefit pension plan at an insurance company
- The pension plan should be changed to a defined contribution pension plan before 2027. There are different types of contracts possible with their own specifics.
- The pension plan should have a flat rate premium, at least for new employees. For current employees, the employer can opt for transitionary laws to maintain an age-increasing premium if the defined benefit scheme is changed into a defined contribution scheme before 2027.
- The partner’s pension should be a percentage of the pensionable salary and independent on years of service, whereas it currently is a percentage of the pensionable base multiplied by the years of service until retirement date.
Defined contribution pension plan with an age-dependent premium table
- The choice for a specific defined contribution contract should be determined. There are different types of contracts possible with their own specifics.
- The pension plan should have a flat rate premium, at least for new employees as from 2027. For current employees, the employer can opt for transitionary laws to maintain an age-increasing premium. Please note that this might not always be the best option.
- The partner’s pension should be a percentage of the pensionable salary and independent on years of service, whereas it currently is a percentage of the pensionable base multiplied by the years of service until retirement date.
Defined contribution pension plan with a flat rate premium
- The choice for a specific defined contribution contract should be determined at the latest per 2027. There are different types of contracts possible with their own specifics.
- The partner’s pension should be a percentage of the pensionable salary and independent on years of service, whereas it currently is a percentage of the pensionable base multiplied by the years of service until retirement date.
Since the changes should be implemented per 2027 at the latest, there is still enough time. If the employer implements a new pension plan, this should comply with legislation immediately. If you have any questions on what this means for your pension plan, please contact us.
8 September 2022
