Will the Future of Pensions Act be changed?
The Future of Pensions Act came into effect on 1 July 2023. See our previous semi-annual newsletter about this landslide. At the time, there was a large majority in the Dutch Senate and House of Representatives. A different reality has now emerged due to the recent House of Representatives elections. For example, the new major political party NSC recommends that pension funds hold a referendum among employees and pensioners if funds want to convert the accrued pensions to the new system (hereafter automatic conversion). A debate on this will take place in January 2024.
Based on the recent parliamentary elections, KWPS is frequently asked whether there is a chance that the Future of Pensions Act will be changed or completely repealed. The latter can only be achieved through a law in which everything is reversed. That is extremely unlikely for several reasons. Firstly, the Future of Pensions Act is part of the more comprehensive Pension Agreement in which agreements have been made about, among other things, the slower rising state pension date, early retirement (the 'RVU schemes') and more flexible indexation rules for pension funds. Secondly, in practice, new regulations already have been set up in accordance with the Future of Pensions Act and the practice has been busy with the preparation and implementation for years. The Pension Agreement changes have been set in motion in a comprehensive manner and can hardly be slowed down. In any case, the chance of significant changes to the law seems small because this requires the consent of both Houses. Few adjustments are conceivable without leading to further ambiguity, resistance and high costs. It is not without reason that the NSC 'only' advocates a participants' referendum on entry.
We see no change for the 50,000 pension schemes administered by insurance companies and premium pension institutions. Automatic conversion of the accrued pensions to the new system is not an issue here because the existing scheme is being closed and there is no automatic transfer of value to the new scheme. The ownership discussion within the funds does not play a role here because each participant has his own guaranteed entitlements and/or his own pension capital.
In short: the last word on automatic conversion by the pension funds has certainly not been spoken or written, also because it is highly likely that there will be lawsuits about this in the Netherlands. Other topics described in the Future of Pensions Act will not or hardly change based on current insights and state of affairs. Employers who are in the process of changing their pension scheme would be wise to continue with this, or to start this process if a start has not yet been made.
