Future Pensions Act: don’t wait too long!
31 July 2024
If your pension scheme doesn’t meet the requirements of the Future Pensions Act (Wet toekomst pensioenen, Wtp) yet, you have until 31 December 2027 at the latest to sort this out. That may sound like an eternity now – but nothing could be further from the truth. A pension scheme is an important term of employment that you can’t set up in one week. Besides, why delay until tomorrow what you can fix today? Here are five reasons why it’s smart to get to grips with the Wtp, today.
We’re willing to bet that the transition to the Wtp isn’t at the top of your to-do list. You already have enough one your plate, and in any case he Act won’t come into effect until a few years from now. So there’s plenty of time – right?
In theory, that’s correct: you still have until 2028 to adapt your pension scheme to the Wtp. However, there are some things that you shouldn’t put off until the last minute. This doesn’t just apply to dental appointments or repairs to your car, but also to your pension scheme. Here’s why:
- It takes work and time
Transitioning to the Wtp isn’t something you can simply fit in between two appointments. This is a major change to a key term of employment, one that you’ll want to involve your employees in. After all, the new pension rules will have consequences for all age groups, from starters to retirees.
A lot will change for you as an employer as well. You’ll have to make decisions about any compensation, the amount of the premium and the surviving dependants’ pension, substantiate all of this in a transition plan and discuss it with the Works Council. In short: not something that you can deal with all at once. You’ll have to deal with this matter step by step. Give yourself the time to ensure a smooth transition process.
- You’ll avoid surprises
Surprises are fun on birthdays, but not when it comes to your employees’ pension plans. By taking action now, you’ll avoid unexpected problems in the future, as a result of which you may have to make hasty decisions. You’re also less likely to encounter legal or administrative obstacles. Good to know: pension administrators often have useful tools available that can give you an indication of the impact of the Wtp on your pension scheme.
- Your adviser doesn’t have all the time in the world
The transition is a process with fixed rules. An adviser can help you with that. However, he or she will undoubtedly have more customers. If all of them seek advice at once in the autumn of 2027, it’ll be panic stations and there’s a chance that your adviser won’t be able to provide you with the best possible guidance – so take a proactive approach and avail yourself of your pension adviser’s time now. This will prevent you from being at the back of the queue.
- It’s good employment practice
By taking action on time, you’ll score points with employees. You show that your organisation is committed and reliable and that you take the financial future of your employees seriously. It won’t just be appreciated by existing employees, but serve as a calling card for new employees as well. Quite handy in the current war for talent!
- You’ll have to act at some point
When it comes to pensions, 1 January 2028 is D-day. That’s when you’re required to comply with the new Act, so you’d better have it sorted out by then, hadn’t you? Give yourself the space to make informed decisions. This will prevent you from getting into a tight spot later on.
In short: get to grips with the Wtp. Your employees will be grateful to you and you’ll save yourself a lot of unnecessary headaches in the final quarter of 2027. Because you know what they say about rushing things!
Need help? Ask what your adviser or pension administrator can do for you. Would you like to know more about what exactly is changing? Read more about the Wtp here.
This article appeared on HR live on 30 July.