Netherlands: Pension Law Changes

In 2019, the Dutch government together with the employee and employer organizations, concluded an agreement on significant changes to the current pension law. This agreement regulates the revision of the second-pillar pension in the Netherlands. The second-pillar pension contains the supplementary pensions that individuals build up as part of their employment as employees.

Future of Pensions Act

Currently, the new pension law (the 'Future of Pensions Act') is not yet adopted. The Dutch Senate will discuss and (most likely) vote on the new pension law at the end of May 2023. Based on the current proposal for the new law and the timing of the voting in the Dutch Senate, the new pension law may be adopted by the end of May 2023 and enacted by 1 July 2023. Once the law is in effect, the different stakeholders (unions, employers, employees and pension providers) will have 3.5 years (until 1 January 2027) to adjust the existing pension schemes to the new legislation.

Central employment condition

The most significant change in the proposed new pension law is that the pension accrual will be different from the current system. Every employee participating in a pension scheme will start building up a personal pension capital through a defined contribution scheme. Defined benefit pension schemes will no longer exist. Hence, the pension contribution will become the central employment condition. Furthermore, the pension contribution will be uniform for all ages and will not deviate per age (the so-called flat contribution). After 1 January 2027, the system of deviating pension contribution based on age may only be continued for employees who were already employed and participating in the pension scheme with such system, based on the transitional law.

As part of these (and more) changes, unions, employers, employees and pension providers should transition to the new pension system and existing agreements must be adjusted to comply with the new law. Compliance with the new pension law requires a transition plan in which all stakeholders should be included.

We are happy to assist you with setting up such a transition plan and providing guidance on this new pension law once it is adopted.

Contact

Should you wish to receive more information or if you have any questions regarding the impact of the new pension law on your business, please contact us.