Concerned about abolishing property rights to pension money?

Suppose that a law is adopted today that governs the following two things:

1. In the event of your death, your money, bank accounts, annuity and investments will lapse in full to the government: 100% tax
2. In exchange for this full remittance – if you live – you will receive a premium from the government every year: a slightly higher savings rate

Good idea? Or would you rather have your money go to your partner and/or children?

The Pensions Future Act
The Pensions Future Act has already come into force in 2023 and, according to the minister, this law governs exactly that 100% payment of your pension money in the event of your death. With a premium that you receive back when you are alive. The only difference is that this is not done through the government, but through your pension administrator. From a legal point of view, this is also incorrectly designed, but the Minister is still persisting in this explanation. This is an important change in the law for many employers and employees, because until now they were also able to choose something else: that this pension money first goes to the partner and children. Just like your savings, annuity and investment account.

The new pension system
More individual and a personal pension pot. That is the essence of the new system. However, many employers and employees already had this in the form of a defined contribution scheme with an insurer or defined contribution pension institution. A clear and transparent solution, including the right of ownership to the pension capital upon death. But it was precisely this piece of individual property that had to go in the new system.

What now?
Do not worry about the capital already accrued: for this, the property right may remain in force after death. This will change for the new capital to be accrued. This does not make it easier and clearer. Thankfully, the House of Representatives has ordered the government to better investigate this issue, and parties that oppose it have won in the election. But the law has now simply gone into effect with a transitional period.

Are you concerned about abolishing this right of ownership of pension money? You can discuss this with your pension adviser and share your concerns with employer and employee organisations.

This article is written by Oscar van Zadelhoff, Productmanager and Lawyer at BeFrank and appeared on HR Praktijk 22 June.