The Dutch pension system will be reformed from 1 July 2023 so that it is more in line with today's labour market and becomes more personal and flexible. It also becomes more explainable and honest about the degree of certainty that is offered. Existing strengths are retained, such as collective investment and risk sharing.
The new rules will take effect on 1 July 2023. After that, there is still time to adjust all current pension schemes. Representatives of employers and employees and pension administrators have until 1 January 2028 to adapt pension schemes to the new rules.
The most important change is that in the future, everyone who accrues pension will do so in a defined contribution scheme. In a defined contribution scheme, it is determined how much money (contribution) the employee and employer put in. A large proportion of the more than 1.3 million participants and 50,000 employers who have placed their pension scheme with an insurer or premium pension institution have already switched to a defined contribution scheme in recent years. As a result, the new rules are less drastic for premium pension institutions and insurers. With their experience and low costs, they are well placed to help employers modernise their pension schemes.
You can find more information about the new rules on www.onsnieuwepensioen.nl and www.werkenaanonspensioen.nl .
Insurers and premium pension institutions (PPIs) administer pension plans for approximately 1.3 million employees of approximately 50,000 companies. Most of these schemes are so-called defined contribution schemes, in which investments are made collectively and risks are shared jointly. In addition, the pension result depends on the contribution paid in and the investment results achieved. Not only insurers and PPIs have such a scheme, many company pension funds also have such a contribution scheme for their staff. Insurers also carry out contracts that provide firm guarantees for the pension, so-called 'Defined benefit' schemes.
PPIs execute more than 11,000 regulations and more than 16,000 contracts (2020 Q1). Together, insurers and PPIs administer more than 50,000 pension schemes.
The Dutch Association of Insurers is a strong supporter of modernising the pension system for all parties involved. For years, the Association has been advocating for a system that is simple, personal and flexible, explainable and shows solidarity and honesty about the degree of certainty. It also needs to be more in line with our labour market. The new agreements made by the social partners contribute to this. Pensions are becoming more transparent and personal, and pension schemes are more in line with developments in society and the labour market.
The new contract is more honest about the level of security offered. It is now also being made clearer to pension funds that the amount of the pension depends on the contribution and the investment results achieved. Participants will have more insight into the contributions they are paying and their personal pension assets. The abolition of the so-called average system has already been welcomed by the Association as a step in the right direction. The main disadvantage of the average system is that young people indirectly subsidise older participants, unless they remain employed by the same employer or sector for the rest of their lives. This system does not fit in well with the current labour market, where more people change jobs.
Demographic developments, a changing labour market, economic dynamics and changing customer needs make it necessary to adapt the pension system. The transition to a system of clear, personal pension assets with risk-sharing solves a large number of bottlenecks.
The pension schemes will become more understandable for the participant, easier to take into account when changing jobs, more resistant to the dynamics of the labour market and offer a basis for more customisation and choices in the future.
Collective organisation of existing solidarity
In a risk-sharing personal pension asset, existing solidary components (such as incapacity for work, premature death or long life) can be well organised collectively. In addition, pension administrators will invest for the entire portfolio, leading to diversification, scale and cost advantages. In addition, in the case of personal pension assets, the employer and employees can continue to make agreements about the pension scheme and they can choose within a company which pension provider (general pension fund, premium pension institution, pension fund or insurer) provides the best performance at the lowest costs.
Comparable welfare gains
Comparable welfare gains can be realised in a personal pension asset as in other types of contract, if the same assumptions are applied. Furthermore, the added value of intergenerational risk-sharing needs to be nuanced. In many cases, the welfare effects of pensions that are in line with the personal preferences and circumstances of the individual and of wise choices appear to be greater than those of risk-sharing.
Finally, it is crucial that the transition to a new pension system does not result in any further austerity of the fiscal framework. This would be a bad start to an already difficult reform and could seriously undermine support for reforms.
Read the Association's position paper on the future of the Dutch pension system.
Keeping up with the times
A few years ago, the Association published the pension vision 'Keeping up with the times; towards a future-proof pension system'. This vision was also based on a study of the needs of consumers (carried out by TNS NIPO). With its vision, the Association wants to contribute to the discussion about the pension system. This can also be expected of insurers, since in addition to individual pension supplements, they also administer about twenty percent of the collective pension schemes in the Netherlands.
The variable benefit (continued investment after the retirement date) has been made possible through the Improved Contribution Scheme Act. As of 1 January 2018, all pension administrators that offer a fixed and/or variable benefit are legally obliged to use the standard model when communicating this to their participants. The aim is to inform the participant as well as possible about the choice the participant has between a fixed benefit and a variable benefit.
Standard model to help you choose
Before the retirement date, insurers send a largely standardised information document to participants. This is intended to help them choose between a fixed and a variable benefit, and from which provider the participant purchases the benefit she wants. The information describes the consequences and risks of this choice.
The standard model offers the information in layers: outline (layer 1) and explanation of outline (layer 2). The layered set-up comes into its own digitally. The Ministry of Social Affairs and Employment has now agreed to the standard model, see also the publication in the Government Gazette.
On this page you will find all the underlying documentation about the standard models.
Saving via a savings account in box 3 is less advantageous if saving via an annuity, because the premiums paid are not tax deductible. Many self-employed people appear to be unaware of these and other tax rules and possibilities to save for later. This ignorance has marked the starting point of the Income Task Force for the future.
The Chamber of Commerce, the Ministry of Social Affairs, Money Wise, Stichting ZZP Nederland, the Dutch Association of Insurers and NIBUD are participating in the Taskforce.
Structural cooperation
The aim of the structural cooperation is to stimulate the pension accrual of the self-employed and to allow self-employed persons to actually take steps towards building up an old-age provision. The Taskforce does this by proposing solutions in which simplicity and flexibility are central in order to respond to the needs of self-employed people.
Good ideas? Report them to the Taskforce!
The Taskforce is for and with self-employed people. That is why she calls on all self-employed people to come forward with ideas, solutions, but also with bottlenecks and especially things that are needed. Then the Taskforce can get to work on that!
Mission
'To increase awareness among the broad target group of self-employed people about the usefulness and necessity of building up an income for later and to encourage self-employed people to actually take steps towards building up an old-age provision. The Taskforce does this by proposing solutions in which simplicity and flexibility are central.'
Procedure
The Taskforce Income for the Future has periodic consultations on three overarching themes:
In certain situations, participants who move abroad or come to the Netherlands from abroad can request to transfer their accrued pension to or from abroad. Since 1 January 2007, the Pensions Act has included a number of provisions in the field of international individual value transfer. A number of these provisions impose obligations on the pension provider.
To help pension administrators with this, the Dutch Association of Insurers and the Pension Federation, together with their members, drew up the manuals and model questionnaires for International Value Transfers in 2012. The aim of the manuals and model questionnaires is to increase the practical feasibility of an international value transfer and to simplify the substantive (legal) assessment. The manuals were fully updated and updated in 2022. At the beginning of 2024, the Manual for outgoing international value transfers was amended due to two rulings by the European Court of Justice on 16 November 2023. Both a Dutch and an English version are available.
The process of automatic value transfer of small pensions (WOKP) started on 1 August 2019. From that moment on, pension administrators will be able to automatically transfer all small pensions that arose on or after 1 January 2018. As a result, the pension retains its destination and small pension entitlements are merged into a more fully-fledged pension.
Implementation of automatic value transfer
In 2018, the Dutch Association of Insurers and the Pension Federation drew up a service document and an extensive Q&A in preparation for the automatic value transfer process (see documents below). The purpose of this service document is to provide all pension administrators with insight into the way in which they can carry out the automatic value transfer of small pensions. For the process to function properly, it is important that all pension administrators follow the same process.
Clean-up of small pensions from before 01-01-2018
There are also several million small pensions in the pension sector that arose before 2018 and that pension administrators also want to (partially) transfer. Legislation stipulates that the Pension Federation and the Association must jointly draw up a plan for the orderly transfer of these small pensions. This plan was published in the Government Gazette on 16 March 2021 and took effect on 1 April 2021. In order to inform the pension administrators about the plan and the way in which administrators can implement the plan, the Pension Federation and the Association have drawn up a second service document.
On 26 April, an addendum to the original plan was published in the Government Gazette. In this plan, an additional schedule has been made for the overflow period that belongs to the original plan for the clean-up action. The carry-over period is intended for the transfer of the small pensions from before 2018, which could not be carried over as planned in the original plan. The carryover period starts on 1 May 2023 and runs until November 2023.
The existing Q&A has been supplemented with questions related to the addendum.
Documents
Standardisation of the collective value transfer process
The process of collective value transfer was not standardised until 2019. Pension administrators had their own procedures and transfer agreements. As a result, collective value transfers were often complex and lengthy processes that neither employers, participants nor implementers enjoyed. A solution was found in 2019.
In December 2018, during the GMM, the members agreed to the collective value transfer protocol. In order to further simplify the process of collective value transfer, a model agreement has been drawn up in addition to the protocol.
This should result in speeding up procedures, clarity for employers and participants and lower costs for all parties involved.
Updated version of the protocol as of 1 July 2024
In June 2024, during the GMM, the members agreed to an updated version of the collective value transfer protocol.
In response to signals from the Pensions Ombudsman about data quality in collective value transfers, the Life Sector Board considered it desirable to supplement the protocol on a number of points. The aim is to further improve communication with the participant and to make the process clearer and less error-prone. The new version of the protocol can be found here. The passages that are new, or have been changed from the previous version, are shaded in yellow. For more information, see the member circular that has been published.
For whom?
The collective value transfer protocol concerns generally binding self-regulation and entered into force on 1 January 2019. Initially, the protocol only applied to pension insurers. Other pension administrators may also use the protocol and the model agreement. From 1 July 2024, the protocol will formally also apply to premium pension institutions, which had already applied it in practice.
Model agreement collective value transfer
The model agreement is a standard contract that reflects the agreements made in the protocol and must be used by pension insurers and premium pension institutions in the case of collective value transfers. The model agreement offers scope to be able to give substance to any specific situations (as a result of current agreements) that are not provided for in the standard contract.
The model agreement has been updated as of March 2023. The model agreement has been amended on the following points:
1. The obligation to provide information
2. Statement on the date of transfer
3. Privacy
4. Textual Tightening
Model letter DC-DC value transfers
The Association and Adfiz have collaborated on a model letter for non-complex value transfers between DC schemes. The reason for this is the need in the market to make the process for a value transfer more efficient and to inform the employee more clearly.
An employer who opts for a collective value transfer must carefully inform an employee about the consequences of the value transfer. According to the Pensions Act (art. 83), the employee must be informed of a proposed collective value transfer and gain insight into the consequences thereof. On the basis of this information, the employee must be able to make a proper assessment of whether or not to object to the value transfer. The use of the model letter (based on requesting and receiving the aforementioned information from the transferring and receiving pension administrator) contributes to the adequate provision of information to the participant and an efficient design of the value transfer process. The model letter and manual can be found here , under 'Participant letter collective value transfer between two non-complex DC schemes'.