News item | 5/30/2023 | 22:30
Transition to new pension system will start on 1 July 2023
After the House of Representatives, the Senate also approved the Future Pensions Act on Tuesday evening. The law will take effect on July 1. On that date, a transitional phase of several years will start in which employers and employees will first make agreements with each other about adjusting their pension scheme and then pension administrators will implement these agreements.
Elaboration of the Pension Agreement
The ‘Future Pensions Act’ sets out the agreements that employers, employees and the government made in 2019 in the Pension Agreement. The law has three goals: a supplementary pension that rises faster, a more personal and clearer pension accrual, and a pension system that is more in line with people no longer working for one boss for 40 years.
What remains the same?
The starting point of the new law remains that the pension is accrued jointly and that financial risks are shared. Employers and employees pay premiums, pension administrators invest that money and pay out the pension benefits.
And what changes?
In recent years, most pensions have hardly or not increased at all. In the new pension system, pension providers can use the proceeds of their investments more quickly to increase pensions. It also works the other way around: if things go badly, pensions can also be reduced. The new pension law does provide for buffers to absorb this as much as possible.
The new pension law also ensures that it becomes clearer and more personal how much pension has been accrued. From now on, a member’s pension will be all premiums paid on behalf of that member, plus the return generated by this money.
What also changes is that the contributions paid by employees at any age will be added to their own pension. In the previous system, most of the pension accrued at the end of one’s career and there was an implicit subsidy from young to old. A different job or unemployment at the end of the career therefore had extra major consequences. In this way, the new law is more in line with the fact that people no longer work for one boss for forty years.
Comments
Minister Carola Schouten for Poverty Policy, Participation and Pensions:
This is an important step. With this law we ensure that our pension remains properly arranged, for the people who have already retired, for the people who work and for future generations. After many years of discussion and good treatment in the House of Representatives and the Senate, the transition to the new pension system is now underway. That also creates a great responsibility: to make the transition carefully and to provide good information about what remains the same and what changes in the old-age provision of the Dutch.
Tuur Elzinga, chairman FNV:
Parliament’s support for the new pension law is a major step in the elaboration of the 2019 Pension Agreement. On the one hand, it marks the end of a period of extensive research, frequent consultation and many negotiations, and on the other hand, there is still a great deal of work to do. With the new law in hand, the pension funds can design the pension more transparently and fairly and choose to share the risks collectively even more effectively. This makes indexing faster. The Pension Agreement also includes temporary agreements on early retirement. It is now high time that structural agreements were made so that people with heavy occupations can stop working on time. As FNV, we are going to work hard on this.
Ingrid Thijssen: chairman of VNO-NCW:
The ministry, countless experts and social partners have worked hard and carefully for years to bring about this important and necessary modernization. This will finally give the pension system the major overhaul it needs. It is now up to employers, employees and the pension sector to speed up the careful elaboration, so that the system can keep up with the times and we all gain a better insight into our pension.
Piet Fortuin, chairman CNV:
Today we are taking a historic step towards a future-proof pension system. This new system continues to show solidarity, is more in line with the labor market and gives participants a better view of their pension. Pension benefits remain lifelong, including the partner’s pension. Moreover, we can index pensions more quickly. The first step has already been taken with record indexations of 12% and even more at some pension funds. The CNV has worked hard for these indexations and is pleased that the new system offers more options for this.
Ger Jaarsma, chairman of the Pension Federation:
As pension funds, we are pleased with this result. The new law fits this century. We have been preparing for a long time, but from now on we can really make decisions together with the social partners. We are now on the move. We have a lot of work ahead of us. Small and large funds and their pension administration organizations are tackling this challenge together. One thing is certain: when we are ready in 2028, the Netherlands will have a pension that is ready for the future. A pension that can also grow along with the rising prices better than now.
Jacco Vonhof, chairman MKB-Nederland:
This law makes it possible to take the final step towards a more personal pension system. Because without people usually realizing it, they often work at least one day a week before they retire. I also think it is really beneficial that pension premiums become stable and predictable and that independent entrepreneurs are given more options for pension accrual.
Sjaak van der Tak, chairman of LTO Netherlands:
This new pension law marks the start of a major transition in the pension system for all workers and employers. The new system provides better pension prospects for all employees and employers and is therefore an important step forward. In addition, there will also be more opportunities for self-employed entrepreneurs to accrue extra pension due to greater fiscal scope.
Nic van Holstein, VCP chairman:
Our organizations are now going to work with good employment conditions agreements about the employment conditions pension, including the survivor’s pension, with joint responsibility of employers and government. It is important that no participants are disadvantaged compared to other participants and that the abolition of the average system works out in a balanced way. The Trade Union Federation for Professionals (VCP) will keep all parties focused on the goals, including adequate compensation, that have been agreed in the pension agreement.
Richard Weurding – General Manager of the Dutch Association of Insurers:
This switch to contribution schemes makes the pension more personal, more flexible and easier to explain. I expect that this will increase the involvement and influence of participants. Retirement becomes less of a far from my bed show.
Jan Berndsen, Head of Pensions AFM:
The new Pension Act is a positive and necessary step in the review of our pension system. The AFM welcomes the fact that safeguards have been included in the law that contribute to making the pension easier to explain and transparent to the participants, and that make the pension schemes better suited to the participants. There is still a lot of work to be done before the entire transition is completed. The AFM also expects that the interests of participants will not be lost sight of in the implementation of the transition.
Information provision about new system
Together with pension providers, trade unions and employers, the government is launching an information campaign to provide the Dutch with good information about what will remain the same and what will change in the new system. This consists of general information about the new system and personal information about the own pension provision by the pension providers. More information about the new system can be found at www.onsnieuwepensioen.nl.