The Pension Act has barely been introduced and it is already under a magnifying glass. New House of Representatives much more critical: ‘I think there are reasonable alternatives’

The ink on the new Pension Act has barely dried and there is already uncertainty about the future of the pension system. There are critical legal opinions, left-wing parties see their conditions regarding early retirement disappearing from view and the new House of Representatives is a lot more critical.

It has only been six months since Parliament finally gave the green light to the Pension Act, but outgoing Minister Carola Schouten (Pensions) will soon have to go back to the House of Representatives to defend it. And she suddenly has a Chamber sitting opposite her that is much more critical of the new system than the previous one. It still approved the Pension Act with an approximately two-thirds majority.

There was a broad feeling in Parliament at the time that the pension system was no longer sustainable. Due to strict calculation rules, pensions were not increased for years, even though the Netherlands was doing well economically. In the new system, the pension must move more quickly with daily rates. That could mean a faster increase, but that also applies to discounts.

Different relationships in the Chamber

But since the election win of critical parties PVV and NSC, and the significant loss of the former coalition parties, the pension situation has changed completely. And so the first act of NSC MP Agnes Joseph last week was to request a debate on the transition to the new pension system.

Joseph is concerned about the way in which the accrued pension rights will ultimately be transferred to a new pension system. Funds are now given a simple choice: they either make the switch or not, and if they do, everyone’s money for old age must be transferred in one go. It is the so-called ‘entering’ of pension rights.

Joseph would like to see this differently: “I think there are reasonable alternatives.” For example, the NSC MP is thinking about ‘growing in’. The existing pensions will remain in the old system and the new pension rights will also be accrued in accordance with the new Pension Act.

During the discussion of the Pension Act, that idea was put aside by Schouten, because it would be too much of an administrative burden. Pension funds would have to keep double accounting for decades. “That has been made into a bigger problem than it is,” says Joseph. “Many funds already maintain multiple schemes at the same time.”

NSC suggests referendums

Another option, according to the NSC MP, is for pension funds to hold referenda among their participants to ask whether or not they want to join the new system. Joseph fears a flood of lawsuits if funds are simply transferred to the new system without participation. The Council for the Judiciary also warned about this during the discussion of the Pension Act.

Joseph feels strengthened by old legal advice that was made public last Friday. These documents, which date from 2011, when an attempt was also made to reform the pension system, raise serious questions about the legal tenability of boarding. Minister Schouten points out that those recommendations concerned a different change to the pension system than that currently in place.

What remains of early retirement?

Another potential problem for Schouten is the collapse of discussions on a new early retirement scheme for heavy professions. PvdA and GroenLinks had made this a condition for their support of the Pension Act. The support has now been given, but early retirement seems to be out of the picture for the time being. That bothers the left-wing block. “Our position on early retirement has not changed. There must be a permanent arrangement,” says a spokesperson for the faction.

The pressure on Minister Schouten and the new pension system is therefore increasing, while funds are already busy with the transition. Schouten does not want to anticipate the debate that will probably follow in January. “I will first enter into a debate with the House to hear how they view it,” says the minister.

The CU minister also points out that the transition to a new system has started after parliament gave the green light for it. “It is a law that was passed by both Houses with almost a two-thirds majority. I also have to relate to that.”