House of Representatives passes Future of Pensions bill

On Thursday, December 22, a majority of the House of Representatives voted in favor of passing the bill for the Future of Pensions Act (Wtp). It is a positive sign that the government coalition was also able to count on the support of GroenLinks and PvdA, thus potentially also having a majority in the Senate.  

The adoption of the bill is good news for participants and employers, as it brings a pension system that meets today’s requirements within reach. As an administrative organization, APG was also looking forward to this news.

CEO Annette Mosman: “To be ready in time for the transition as an administrative organization, it is important that there is clarity about the details of the new system as soon as possible. The passing of the bill for the Future of Pensions Act (Wtp) by the House of Representatives is an important step towards that clarity. We are particularly pleased that the amendments on a collective distribution phase and on broadening the standard method for converting were adopted last Tuesday. Both are important amendments that make the bill more implementable.”

To achieve a House majority for the Future of Pensions Act, 45 amendments and 50 motions had to be voted on. This vote took place on December 22. In doing so, the main amendments and motions of the Green Left and the Labour Party were adopted - a condition of these parties’ support for the bill. These include three amendments aimed at reducing the so-called “white spot” (employees who are not accruing a pension) and a motion on arduous professions. The motion calls on the government to come up with a new early retirement scheme, which will be better at targeting arduous professions, after the current one expires in 2025.

Now that the House of Representatives has agreed, the bill is finalized and can go to the Senate, where the debates on the draft legislation will begin in January. The aim is for the Future of Pensions Act to take effect on July 1, 2023.

Explanation of amendments and motions

An amendment is a proposal by one or more members of the House of Representatives to amend a bill. A motion is a statement by the House of Representatives, proposed by one or more House members and often used to record a conclusion of a debate or an action item for a minister or secretary of state.

• Three amendments on reducing the “white spot” (workers who are not accruing a pension): To reduce this, it was agreed that workers will begin accruing a pension at age 18 (it is currently 21). The waiting period is being eliminated, reducing pension gaps. A quantitative reduction target is included in the law, to halve the number of workers who are not accruing a pension by January 1, 2028.
• Motion on arduous professions: requesting the government to come up with a new early retirement scheme that is better at targeting arduous professions, after the current one expires in 2025.
• Amendment on a collective benefit phase: proposal to allow a collective benefit scheme for the solidarity contract too (as in the flexible contract). To allow equal adjustments of benefits, it is much easier to be able to focus administration on benefits rather than personal pension assets.
• Amendment on broadening the default method for converting. Two calculation methods are possible for converting pension entitlements under the current pension system to personal pension assets in the new system: the default method and the VBA method. The standard method is the default. But at higher funding ratios, the standard method does not always lead to balanced outcomes. In such a case, funds might still have to opt for the complex VBA method. This amendment provides for a little more leeway in the default method so that this method can also be used at higher funding ratios.