22 Sep Pension update: What do the new pension rules mean for your business?
The new pension rules
The cabinet, together with employee- and employer organizations, has reached a pension agreement with new agreements on pensions and state pension. Reasons for revising the pension system are changed social preferences and financial conditions. Think of the growing number of flexible employment relationships and self-employed workers and the decreasing number of permanent employment relationships. The new agreements should create a more transparent and personalized pension system. Under the new pension system, among other things, the state pension age will rise more slowly, the position of self-employed workers will change, and there are better arrangements for early retirement for people with heavy work. These agreements are the outcome of ten years of consultations between the government and social partners.
The Future Pensions Act is effective July 1, 2023. Pension providers will have 4.5 years to comply with the new pension rules.
The new pension rules and your business
If a company is affiliated with a (mandatory) industry pension fund, no action is required (yet). The main agreements are then made by the collective bargaining parties within the sector, such as within the Construction, Hospitality and Care and Welfare sectors. The company is then required to comply with the amended pension agreement. Employee consent is not required in that case.
Other major industries, such as I(C)T, will have to work with the new rules. As long as an employee pension plan has not yet been agreed upon, the employer can join the new plan starting next year. Employers who already do have their own pension plans will face new rules, which will lead to a change in the terms of employment.
An individual modification of a pension plan with an employee can be made in two ways: with the employee’s consent or through unilateral modification. By agreeing to the amended pension agreement, the employee is bound by it. Unilateral modification is possible only if a unilateral modification clause has been agreed upon with the employee. Reliance on this requires that the employer have a sufficiently compelling interest. The change in pension legislation is classified as such a compelling interest. If applicable, consent of the works council or advice of the employee representation is also required.
What we can do
Check if action is needed to implement the new legislation. By January 1, 2028, all pension plans must be updated no later than January 1, 2028. Don’t wait too long and get to work on the complex transition to the new system. That way employees are aware of their position. Please feel free to contact one of our attorneys, we would gladly be of your assistance. Call: 010-2492444.