News item | 30-03-2022 | 14:11
In 2019, the government and the social partners agreed on a broad package of measures in the Pension Agreement. Today, the elaboration of this in the Future Pensions Act (Wtp) has been presented to the House of Representatives for consideration by Minister Carola Schouten (Pensions).
The new pension law is in line with the current labor market, offers more prospects for indexation and retains the strongest elements of the old pension system. After consideration and approval in both chambers, employers’ organisations, trade unions and pension funds will have a few more years to implement the changes and to inform the participants about them.
Minister Schouten:
We are not undertaking such a major modernization for the pension sector or for politics. We do this for all those millions of Dutch people who build an adequate income for old age during their working lives. The Dutch must continue to be able to count on a good pension and have confidence in it. This bill contributes to that and that is why I am happy with this milestone.
Tuur Elzinga, chairman of the FNV trade union:
Our goal was a future-proof and fairer pension system with a better prospect of an indexed pension. That worked. At the same time, many good things from the old system have been preserved, such as the power of collectivity and solidarity between generations. We see that previously achieved milestones, delaying the raising of the state pension age and retiring earlier for heavy work, ensure that people reach the finish line in a healthier way.
Ingrid Thijssen, chair of VN0-NCW:
A better insight into your pension and a greater chance of increasing your pension. We are working together to improve the system on all fronts, so that the system is more in line with the labor market. And so that everyone can rely on a good pension with stable premiums.
Future Pensions Act
In the first place, the law creates scope for new pension contracts that offer the prospect of a pension with more purchasing power. Pensions will soon be more flexible and more in line with the economic developments of recent years. If the economy is doing well, the expected pension or benefit will go up. Is the economy getting worse? Then it can go down. In the pension contracts, however, the risk attitude of the participants is better aligned. Young people have the time to absorb windfalls and setbacks in their investments. As you get older, there is less room to absorb these setbacks. That is why we ensure that the flexibility of the benefit decreases when you are (almost) retired. This way we avoid unpleasant surprises if you are close to retirement.
The second aim of this bill is to make pensions more transparent and personal for participants. Everyone will accrue pension through a contribution scheme. The pension premium is central and will be the same for all ages. With the new pension rules, participants see more clearly how much money they and their employer are putting into their pension and how fast this amount is growing.
The new pension system also ensures a better connection with today’s labor market. For example, employees are less likely than in the past to stay with the same employer for the rest of their lives or start working as a self-employed person. The bill moves with the times to resolve these vulnerabilities.
Indexation
Agreements have also been made in the bill to look at the current system from the perspective of the new system during the transition period (2023-2027). Pension funds that intend to transfer the current pensions to the new system (the so-called sailing in) may, subject to conditions, count on more relaxed indexation rules. As a result, there is already more insight into indexation in the run-up to the transition to the new system.
For the year 2022, a separate decree will provide that funds, in anticipation of the new pension law, will also be given the scope to index more quickly. The intention is that this decision will enter into force on 1 July 2022.
keep what is good
The Dutch pension system has been one of the strongest in the world for decades. The strong elements have therefore been retained in the bill. In this way we retain the option of mandatory participation, so that implementation costs remain low and we can share risks collectively. Think of the longevity risk and survivor’s and disability pension. The tax facilitation remains ample to allow retirement at 80% of the average wage after the career. The existing division of roles between the parties involved will also be maintained. The government determines the legal framework and provides for tax facilitation of the pension employment condition. Employers and employees conclude pension agreements and have them executed by a pension provider, while DNB and AFM supervise.
Civil society
Together with the social partners including; VNO-NCW, LTO-Nederland, MKB-Nederland, FNV, CNV, VCP and with the involvement of the Pension Federation, the Dutch Association of Insurers and DNB and AFM, the Pension Agreement was drawn up and this law was subsequently elaborated. During this process, regular consultations were also held with representatives of youth and elderly organizations.
What does the further process look like?
Depending on the legislative process in the House of Representatives and the Senate, the rules are expected to apply from 1 January 2023. The social partners and pension providers will then have 4 years to adapt pension schemes to the new legislation, i.e. until 1 January 2027.