What will change in the new pension system?

The new pension system ensures future-proof pensions that are better suited to the current times. As a result, all pension schemes in the Netherlands must be adjusted before 1 January 2028. In this article we list the changes again for you.

The ‘DC scheme’ will become the standard

The ‘DC scheme’ will soon be the only scheme that may be implemented. DC stands for ‘Defined Contribution’. In short, this means that contributions (premium) are fixed. The income (ultimate pension) is not fixed. At BeFrank, we have been providing DC schemes for more than ten years and are therefore well prepared for the new pension system.

Transition to a fixed pension contribution

In the new pension system, new participants will receive a flat premium percentage of 30% maximum. The premium percentages can now be even higher if a participant falls into a higher age category. In principle, the maximum premium rate limit of 30% will remain the same until 2038. An interim adjustment will only take place in the event of major shocks in real yields. After that, the maximum premium rate will be recalibrated every five years and adjusted automatically. The scope for making an additional contribution yourself will also be age-independent and the assessment for excessive pension (event assessment) will be abolished.

Compensation option

As an employer, you have two options:

• You can choose to keep the existing premium rates for your employees who were already employed before the transition to a new scheme. For employees who join after the transition, a constant premium rate will apply at all times. For you as an employer, this means that you choose to apply two different premiums.
• Alternatively, you choose can to switch to a constant premium rate entirely. In this case, a form of compensation may be required for employees who were employed before the switch. You can choose to compensate employees in salary and turn this compensation into an additional pension premium as standard (with an opt-out). Your employees can opt out of this and choose to receive the compensation net as part of their salary.

The rules for survivors’ and orphan’s pensions will be clarified

The surviving dependants’ pension will be more standardised. When an employee changes employer and pension scheme, the new surviving dependants’ pension is therefore more in line with the pension scheme of the previous employer. During an active employment, a maximum of 50% survivor’s pension and 20% orphan’s pension of the salary is covered. There will also be a standard partner definition and a fixed age of 25 years for the orphan’s pension. In addition, the orphan’s pension is always doubled if both parents are deceased (full orphan).

If an employee leaves the company, the employee will continue to be insured for a surviving dependants’ pension for three or six months as standard. This can be longer if the employee receives unemployment or sickness benefits. After this period, the employee can choose to continue the insurance. The risk premium will then be deducted from the employee’s pension capital.

Distribution of pension capital in the event of death

In the event of death, the distribution of the pension capital changes. We will then distribute the pension capital accrued under the new pension scheme among all BeFrank participants with a similar scheme. Restitution will continue to apply to pension capital accrued for this purpose. Restitution means that the pension capital is used for the surviving dependants’ pension in the event of death.

Cashing out 10% of the retirement pension as a lump sum (expected from 2025)

Under certain conditions, employees are entitled to have a maximum of 10% of the retirement pension paid out on their retirement date. We call this a ‘lump sum’. The effective date of the ‘lump sum’ has already been postponed a few times, but it is now expected to take effect on 1 January 2025.

Compulsory pension accrual from the age of 18

With effect from 1 January 2024, the minimum joining age for all pension schemes has been reduced from 21 to 18. It is now compulsory for employees aged 18 and over to accrue a pension. Additionally, there is no longer a waiting period for temporary workers. In this way, more workers build up a pension.

Transparency is one of the main objectives of the Pension Agreement

Prescribed formats, such as the UPO and Pensioen123 will be eliminated. There will be additional responsibilities for the pension administrator. They will have to do all they can to guide participants in a suitable and appropriate manner when choices are being made. BeFrank has been providing clear communication for the past ten years. Our mission is to bring pensions closer to participants. And we will carry on doing so.

When did the Future Pensions Agreement come into effect?

The law has come into force at 1 July 2023. This means that you may adjust your pension scheme from this date. Your pension scheme must be adjusted before 1 January 2028.

What can you expect from us?

We will of course keep you informed of all developments and decisions, because a lot can still change. And we will continue to inform you about the options we offer you to have your pension scheme fully aligned with the Pension Agreement. Read more about the changes in the new pension system.