The Dutch Parliament and their social partners have reached an agreement on reforming the pension system in the Netherlands: a future-proof and balanced pension system. The new pension framework has come into effect on July 1, 2023, and there is a transition period of up to 4 years for pension providers to implement these new reforms.
These are the steps for HR and employers to follow when these pension plan changes will come into effect:
Step 1. Composition of the Pension Committee
The change of this Dutch pension scheme is a far-reaching process for any company and its employees. Involving all key stakeholders, such as the Management Team, HR, and Works Council as early as possible is therefore of great importance. It can be beneficial to set up a pension committee. The committee could be composed of representatives on behalf of the Works Council, finance, HR, Management Teams, and consultants. The pension committee would be able to determine which options and scenarios will be further investigated and considered, including already thinking ahead with regard to international company communication.
Step 2: Review of the Current Pension Plan in the Netherlands
In order to determine the impact of the upcoming change in the Dutch pension plan, the existing pension scheme must be clearly visible and reviewed. It is important to verify which parts need to be changed and what exceptions or transitional arrangements are part of the current plan. A consultation with the pension provider is a must to identify the key areas of change.
Step 3: Objective Setting
After the review of the current plan, it is important to determine what should be achieved with the intended change of the pension scheme. Reflecting on the changes, and the principles of the current pension plan in the Netherlands should be kept in mind, as well as the company performance and the market.
Examples of objectives and pension plan principles could potentially be:
- Compliance with the full amended laws and regulations.
- Implementing, where possible, cost-neutral adjustments.
- Practical feasibility.
- Exclusion of risks.
- Preventing and/or reducing exceptions.
- Restricting implementation costs.
- Sharing preference for a pension provider.
Step 4: First Draft of the Pension Plan Design
On the basis of the principles and the new framework, a first high-level draft of the new pension plan should be prepared.
It should include the type of changes, adjustments of articles and also changes related to:
- old-age pension (accrual rate, amount of franchise);
- partner’s and orphan’s pension;
- disability pension or contribution exemption in the event of incapacity for work;
- employee’s and employer’s contribution.
Step 5: Impact Assessment
The impact of the new pension plan for employer and employee must also be identified. It should at least include change impact scenarios related to tax, legal legislation, costs for employees and employer, and the accrual of pension for employees.
Step 6: Draft of Pension Netherlands Plan
The results of the impact assessment may set in motion the changes in parts of the intended pension scheme or even give nuances to the principles.
Step 7: Works Council Approval
The changes in the current pension plan or the implementation of a new pension plan must be submitted to the Works Council by the employer.
The Works Council has the right of consent when determining, withdrawing, and amending the pension agreement. This is laid down in the WOR Article 27(1)(a) and (3). Consent by the Works Council is out of scope when the pension plan is arranged through an industry pension fund, or is laid down in a collective labour agreement by employers and trade unions.
Step 8: Review of Legal Documents
A change in the pension plan framework in the Netherlands also means the amendment of existing pension regulations, implementation agreement and service level agreement between the employer and the (new) pension provider. It must be carefully checked in advance whether everything in these documents is in accordance with the wishes and whether it fits well together.
Step 9: Implementation and Communication
The new arrangement agreed on between the parties is communicated within the company. For example, through information meetings and news items. In addition, each participant must receive an individual statement outlining what the consequences of the new regulation are for him or her. Depending on the company structure, the employee must also individually agree to the changes. The legal documents in which the employer’s commitments to the employee are recorded, are definitively amended.
Step 10: Evaluation Pension Plan in the Netherlands
The amended pension scheme may involve a stream of paperwork and questions, which will have to be processed. It is important to check whether all legal documents have been changed and stored in the desired places. The pension committee will make sure all actions are followed up on, to decrease any compliance risks and issues.
Human in Progress has the expertise to support employers and Works Councils in this Dutch plan reform framework. Schedule a call with us to explore our HR services solutions.