Senate approves largest pension reform ever | Money

In addition to coalition parties VVD, D66, CDA and ChristenUnie, the bill received support from PvdA, GroenLinks and SGP. Now that the senate has supported the law, after 15 years of discussion, a political decision has been made about the future of the pension system. Pensions will soon become less certain. This has the advantage that fewer reserves are required and pensions can be raised sooner. The downside is that cuts can also be made earlier if the economic tide is against.

Minister Carola Schouten (Pensions) calls it ‘an important step’. “With this law we ensure that our pension remains well arranged,” said the minister. According to Schouten, this applies to people who have already retired, but also to people who are still working now and to future generations. In the new system, pension accrual will be more personal than in the current system, which is based on a collective pot.

The Dutch pension assets (of hundreds of billions) will soon move from a collective pot to largely individual pots. The switch to this new way of accruing pension may cost tens of billions and it is not yet entirely clear how the new system will work out for specific funds. However, many parties see that the pension system in its current form is no longer up to date. The new system is more flexible and better suited to the current labor market. In times of economic prosperity, more pensions can be paid out more quickly, and cuts are made sooner in the event of poor stock market results.

Opponents of the new system tried to arrange a postponement of treatment at the last minute. SP senator Tiny Kox pointed to the effect of the new law on the pension scheme for political office holders, including parliamentarians themselves. That is why, according to the constitution, a two-thirds majority is required, says Kox, which was also not achieved in the House of Representatives. Proponents of the law say that it is merely a technical adjustment that does not directly affect MPs and other office holders.

Even a warning from professors of constitutional law that the pension law would go against the Constitution did not change the mind of a large majority of the senators. Schouten says he feels a ‘great responsibility’ for a careful transition.

In principle, pension funds have until 1 January 2028 to make the transition to a new system. That is a year later than planned: Minister Carola Schouten (Pensions) met the Senate last week. Then it will also become clear how the pension assets – together the funds have almost 1500 billion euros in cash – are distributed among the participants.

Now that the new Pensions Act has also been adopted in the Senate, FNV wants to work quickly on structural agreements so that people with heavy occupations can retire on time. According to Tuur Elzinga, the support in the senate for the law is ‘a big step’ in the elaboration of the pension agreement that the unions concluded with employers in 2019. But he emphasizes that pension funds still have a lot of work to do in the coming years.

CNV chairman Piet Fortuin believes that the new system also remains solidary. “Pension benefits remain lifelong, including the partner’s pension,” he says in a first response. Employers’ organization VNO-NCW is pleased that the Senate has now also cleared the way for a review of the pension system. “This will finally give the pension system the major overhaul it needs,” says chairman Ingrid Thijssen.

It is now time to speed up the implementation of all the changes, says umbrella organization Pensioenfederatie. “We have been preparing for a long time, but from now on we can really make decisions together with the social partners,” says chairman Ger Jaarsma of the Pensioenfederatie, the umbrella organization for almost all pension funds in the Netherlands.

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