The new Pensions Act will enter into force on January 1, 2023 – a year later than planned. This is according to a letter from Minister Koolmees of Social Affairs and Employment to the Netherlands House of Representatives. The legislative process needs more time. But why? And will this also jeopardize the transition to the new system? Here are four questions on the new schedule.
Why is the Pensions Act entering into force a year later?
It will enter into force later because it is being submitted later than planned. It was supposed to be submitted to the Netherlands House of Representatives after the summer, but this will not happen until early 2022. According to Koolmees, this is due to complexity of the issue. Tinka den Arend, strategic policy officer at APG, mentions the large number of responses to the internet consultation as an additional factor in the delay. Participants in the consultation could share their thoughts about the pension agreement. “The internet consultation attracted about 800 responses about both details and more essential elements. The Ministry wants to take a thorough look at all of these responses. Many parts of the changes to the system need further elaboration, which is a time-consuming process,” says Den Arend.
The transition to the new system was planned for no later than January 1, 2026. Is that date moving forward as well?
Yes. Due to the delay in the legislative process, funds and administrators now have until January 1, 2027 to implement the legislation. Nevertheless, APG wants to stick to the original transition date of January 1, 2026. “Or sooner,” says Peter Gortzak, director of policy implementation at APG. “This postponement has created more realistic timelines for the legislative process. After all, there’s still a lot of work that needs to be done. And ultimately, we all benefit from diligence in the legislative process. However, as far as we’re concerned, this will not lead to the implementation being postponed. Employers’ and employees’ organizations as well as the pension administrators still have their sights set on January 1, 2026 as the implementation date, or earlier where possible.”
This is an ambitious aim, but is this schedule realistic?
According to Math Vrolings, Pension of the Future program manager, it is – at least for the moment. “For the time being, nothing will change. We’re sticking to our plans of action as much as possible. Working according to hypotheses means we can continue to make progress, subject to the final regulations. This is essential, as we’ll need to absorb the setbacks that this high-impact change will lead to soon or later,” explains Vrolings.
To prepare for the new system, the original schedule contained a proposal for a financial assessment framework for the transition, known as a “transitie-ftk” in Dutch. This framework will temporarily suspend the existing requirements for the financial assessment framework between 2022 and 2026, in order to facilitate implementation. What’s happening with this?
Den Arend explains: “The financial assessment framework for the transition follows the legislative timeline and will therefore apply from 2023 to 2027. In order to avoid unnecessary reductions, Minister Koolmees wants to apply the exemption regulations again in 2022, so that – as a general rule – no reductions are needed at a coverage ratio of 90% or more. Postponing the effective date of the financial assessment framework offers pension fund Boards, in consultation with employers’ and employees’ organizations, more scope for careful consideration about whether and how it will be used.”