From the date the Future of Pensions Act comes into force, pension providers will have four years to adjust their pension schemes. Its entry into force is still scheduled for 1 January 2023. This means that pension providers and employer and employee representatives must be ready by 31 December 2026.
The plans for the new Act have been submitted to the Council of State. This article is based on the plans and timelines known today.
Milestones: what needs to be ready when?The transition period includes several legal milestones. They specify who bears primary responsibility for achieving the milestone and the date by which the milestone must be achieved. In practice, responsibility will almost always be shared between, for example, the employer, the participants, the adviser and the pension provider.
The first milestone, to be achieved by 1 January 2025, requires the employer, the participants and the pension provider to have reached agreement on the new pension scheme. On that date, the transition plan must be completed and the necessary steps in the context of employee representation must have been taken, and any arrangements on compensation must also be clear.
The second milestone relates to the stage of placement, execution and implementation at the pension provider. The implementation plan must be sent to the regulatory authority by 1 July 2025. This will allow sufficient time to implement the scheme by 31 December 2026.
|1 January 2023||Future of Pensions Act comes into force||Government|
|1 January 2023 to 31 December 2026||Transition period definite||Employer, adviser, pension provider|
|1 January 2025||Transition plan||Employer, adviser|
|1 July 2025||Implementation plan||Pension provider|
|31 December 2026||Implementation completed||Pension provider, employer, adviser|
Transition planEmployers are obliged to prepare a transition plan (or have one prepared) if they have a pension agreement with their employees on 31 December 2022 and do not avail themselves of transitional law. An age-related graduated scale may still be applied for existing participants under transitional law.
The transition plan is the basis for the transition. It provides details on issues including the pension scheme opted for, the reasons for this decision and the consequences for participants’ pensions. The plan will be sent along with the request for consent to amend the pension agreement to the works council and/or employee representatives.
Implementation planIn the implementation plan, the pension provider explains the preparations and time needed for the execution of the new pension scheme. This plan also states how the new pension scheme will be executed. The pension provider discusses, among other things, the technical practicability, costs and risks of executing the pension scheme and the risk management measures taken.
The obligation to draw up an implementation plan does not apply in the case of non-retroactive effect of a contribution scheme with age-related graduated scales.
Communication planA communication plan is part of the implementation plan. The communication plan informs participants about changes and offers them the possibility to request a copy of the pension scheme rules.
In addition, the pension provider must explain to participants, former participants, former partners and pensioners how the transition will affect their pensions.
How we will help you during the transition period
It is important that advisers, employers and participants know in good time how the transition to the new pension scheme may affect them. After all, there must be sufficient time to obtain individual participants’ consent, if necessary to be preceded by guiding talks to be held with the works council and/or employee representatives. The transition from an average pay scheme to a defined contribution scheme, for example, is a big change. What will happen to the pension capital? And what choices will participants have for their income in the future? We are happy to help make the consequences clear to employers and participants alike.
Participants’ interests take priority in the transition to a new pension scheme. We will explain the differences between the old scheme and the new scheme. And participants will receive all the information they need to make the right choices in the new scheme. There will also be a tool for advisers to make their own calculations. Information about this will be made available at a later date.
CompensationOur common goal in the transition to a new pension scheme is, of course, that participants will not be worse off than they were under the previous scheme. Does the calculation show that a participant will have less (expected) pension capital because of the transition? They may be compensated for this until 1 January 2037, i.e. until at most 14 years from 2023 and 10 years from 2027.
Zwitserleven will offer the possibility to settle the compensation in the form of pension. We are still working out the details.
Employers may also offer compensation through wage payment. Does the employer offer PensioenAanvullen (supplementary pension) and does the participant have sufficient tax allowance? In that case, the participant may use it for additional pension accrual through PensioenAanvullen, for example.
Effective date for new and existing pension schemesIt depends on the situation on 1 January 2023 when the pension scheme must comply with the new Act.
- If an employer concludes a pension scheme for the first time on or after 1 January 2023, this scheme must comply with the new Act straight away.
- As for existing pension schemes, employers must switch to a compliant pension scheme by 1 January 2027 at the latest.
Pension schemes offered by Zwitserleven (PPI)
Zwitserleven will continue to offer DB schemes in 2023 as well. This applies to renewals and to new contracts. Contracts will end on 31 December 2026 at the latest.
We are adapting our Exclusief Pensioen and Nu Pensioen products to meet the requirements of the new Act before 1 January 2023.
More information about the changes and timelines applicable to the Netto Pensioen product will follow at a later date.