The Dutch pension system is changing radically with the Future Pensions Act (Wtp), in force since 1 July 2023. Employers have until 1 January 2028 to adapt their pension scheme to the new rules. Although that may still seem far off, it is wise to already look at what this means for your organisation. The changes affect not only how premiums are calculated, but can also have direct financial and employment law consequences.
The main changes
At the heart of the new system is a switch to a flat premium. This means every employee, regardless of age, gets the same premium percentage. As a result, younger employees build up relatively more pension, while older employees, on average, build up somewhat less than under the current system. Employers who already have a pension scheme may therefore need to take compensation measures to avoid disadvantaging existing employees.
In addition, the pension entry age has been lowered from 21 to 18, and an employee may, on retirement, withdraw 10% of the accrued amount as a lump sum. The link between the state pension (AOW) age and life expectancy has also been adjusted, which can affect the pension age under existing schemes.
Transitional law and options
Do you, as an employer, already have an existing pension scheme with an increasing premium scale? You can choose to apply the so-called transitional law. In that case, the old premium scale continues to apply to existing participants, and the flat premium only applies to new employees. This may seem like a practical solution, but it does mean you will have two different schemes operating in your workplace, which can lead to differences in employment conditions.
Legal and financial points of attention
The switch to the new pension system brings legal obligations with it. Think of informing and consulting the works council in good time, amending employment contracts, and coordinating with the pension provider. Compensation for employees who are disadvantaged by the new flat premium also requires careful arrangements, both legally and financially.
Failing to adapt the pension scheme, or doing so too late, can lead to non-compliance with the law, possible disputes with employees, or even fines from regulators. Do you have questions about the new pension system? Please feel free to contact our employment lawyers.
