The pension deal, agreed in 2019 between employer and employee representatives and the (former) cabinet, is currently being legally enshrined in the Future of Pensions Act. The introduction of that law was targeted for 1 January 2022 and had previously been postponed to 1 January 2023. In early October, the intended implementation date was further postponed to 1 July 2023. The deadline for transition to the new system does not change; it remains at 1 January 2027.
The final implementation date depends on further congressional debate. Plenary debate is currently under way in the Tweede Kamer; on Thursday 10 November, Minister Schouten replied to the questions raised in the first term. The aim is for the votes to take place this year, and then for the Eerste Kamer (Senate) to take up the new law. The current coalition needs the support of other parties for this. PvdA and GroenLinks have supported the pension deal in intent, and have been constructively critical in the congressional debate so far. In particular, they have made demands to reduce what is referred to as the ‘white spot’; the percentage of employed people without pension accrual. That percentage has increased sharply in recent years, and PvdA and Groen Links aim to at least halve it. To this end, the second pillar should be made more accessible for pension accrual, and they propose lowering the starting age for pension accrual to 18 years.
In the debate on 10 November, the possibility of investing with borrowed money was further discussed at length. This possibility is offered in the solidarity-based contribution agreement (which is intended for pension funds), and not in the flexible contribution agreement (which will also be implemented by insurers and PPIs). Following the debate, it seems that a limit will be placed on the extent to which this possibility can be used.
The essence of the Future Pensions Act is that all pension plans will become defined contribution plans, with an age-independent contribution of up to 30% of pensionable earnings. Above that maximum limit, additional premiums are still allowed for risk coverage, for implementation costs, and possibly for compensation to active members. There is a broad exception category to this main rule, as there is a transitional right for current contribution agreements and for existing insured schemes. For them, it will be allowed to continue to assume a premium that increases with age for employees in service at the transition date. For new employees from that date, however, an age-dependent premium must be introduced. This transitional law does not apply to defined benefit agreements with pension funds.
The postponement to 1 July means, among other things, that the deadline by which an employer must have a contribution agreement (or an insured scheme) to qualify for that transitional right also moves forward. Effectively, delaying the law to 1 July is equivalent to delaying it until 1 January 2024; there will be few, if any, plans that will formally comply with the Future Pensions Act before that date.
In our view, it remains the obvious choice for employers to move to the new regime at the end of their current agreements (provided that that end date is on or before 1 January 2027).
For more information, please contact Wichert Hoekert
