Failing to transition to the new pension system in time can have major tax consequences

“A fiscal blow threatens 1.6 million pension policyholders,” NOS headlined alarmingly. This followed a memo from the Dutch Tax and Customs Administration, stating that many smaller employers have not yet begun preparing for the new Pension Act. As a result, tax issues may arise, and employees could suddenly owe tax on a substantial amount.

That risk is very real, confirms Dave Beerepoot, Senior Product Manager at pension provider BeFrank. “The clock is really ticking,” he says. He strongly advises employers to take action in 2026. “Employers must have transitioned by 2028 at the latest. That may still seem far away, but the warning is very valid. Changing a pension scheme simply takes time. You need alignment with your pension provider, your pension adviser, your Works Council or employee representatives. That’s not arranged overnight. And pension advisers will, of course, be extremely busy—especially as the deadline approaches. So I absolutely agree with the call to take action now. Don’t think: ‘I’ll wait until 2027’.”

Non‑compliant for tax purposes

In short, here’s the issue: most people in the Netherlands accrue pension automatically through an pension fund. However, nearly 20% of workers are with a different pension provider instead. Their employer typically arranges their pension by contracting a pension insurer or a premium pension institution (PPI) via a pension adviser. This often involves SMEs with roughly 10 to 250 employees, though larger companies not bound to an industry fund also fall into this category. According to the latest figures from De Nederlandsche Bank, this amounts to around 57,000 contracts between employers and insurers.

From 2028, however, the Tax and Customs Administration will no longer consider the money in such schemes as pension, but as wages. Employees would then owe income tax on it. In addition, the tax authorities would impose a penalty in the form of 20% additional interest—known as revisierente. Combined, the financial impact can be significant. And if this happens, employers also run the risk of damaging their relationship with employees. “Your pension then becomes non‑compliant for tax purposes,” Beerepoot explains. There are also consequences for employers. If they do not transition in time, they violate the Pension Act while still having a pension commitment to their employees. Regulators may impose administrative fines for such violations. “And these fines can be quite substantial.”

Survivors’ benefits

And there is yet another risk, he warns. “If an employer has not adjusted the pension scheme by 1 January 2028, employees will no longer accrue pension. But the risks of death and disability will also no longer be insured. A spouse or partner may then be left with nothing. That may even be more serious than the potential fines. It can lead to extremely distressing situations.”

Step‑by‑step plan

Waiting until 2027, as many employers appear to do now? Beerepoot believes that would be unwise. The risks are substantial, he says. Why postpone what you will ultimately have to arrange anyway—and can already address now? “A transition process can easily take more than a year, depending on the complexity of your scheme and employee representation. And in 2027, pension advisers and providers will likely be far busier. So it makes much more sense to start preparing now, or even transition immediately.”

“If things continue like this, many employers will be too late,” government commissioner Fieke van der Lecq has already warned. Beerepoot fully agrees. Switching over does not have to be complicated, he emphasises. Many pension advisers can assist employers. And BeFrank has developed a simple step‑by‑step plan to help employers make the transition in clear, bite-sized steps. “We obviously don’t want participants to be unnecessarily affected. And as an employer, you definitely don’t want to be left with the consequences. So if you need one good resolution for 2026: start NOW and ensure your pension scheme is fully future‑proof in time.”