Impact Future of Pensions Act depends on choices made by employer with advisor

Pension administrator BeFrank says that the passing of the Future of Pensions Act (Wtp) marks a step towards a future-proof pension system for the whole of the Netherlands. Director Sebastiaan van den Dries: “It is wonderful that with the achievement of this milestone, there is now clarity for employers and participants about what pensions will be doing.”

A key BeFrank spearhead is a transparent, future-proof system. “We have been successfully running defined contribution schemes with individual pension funds for 12 years.” The fact that the Senate as well as the House of Representatives have agreed to the new law, which takes effect on July this year, is therefore welcomed by the company.

Clearer and simpler

Under the new pension law, everyone is transferred to an equal graduated scale. For young people, this means they will contribute more. For older participants, it means less premium contributions. “What the exact impact is depends on the choices made by the employer together with its advisor. For instance, the law provides room for compensation for target groups that lose out. In addition, the surviving dependants’ pension will become clearer and simpler. This makes it clear to participants, their partners and/or children what is arranged for them. We stand for clarity and simplicity, so we welcome that.”

After embracing the new law, the transition to the new pension system can now be initiated. It is the turn of pension administration organisations to get to work on careful elaboration. Van den Dries explains that BeFrank has been preparing the necessary adjustments to align its schemes with the new pension law for some time. “We have always kept our customers and advisors up to date on developments, both with regard to legislation and at BeFrank,” he said. We will continue to do so.”

Selection Tool gives indication of impact

To help customers prepare for the new pension system, the BeFrank Selection Tool was developed, which gives employers an at-a-glance indication of the impact of the new system on the pension scheme at the pension administrator. An advisor can then calculate and advise exact amounts. In addition, the Survivor’s Pension Assistance has been developed for participants. Van den Dries: “We thus guide participants step by step in making choices for the surviving dependants’ pension and make the choices personal.”

Making preparations

It is now up to employers to work with their advisors to convert the pension scheme to the new pension rules and inform relations about the new pension law and options. “That’s something we are naturally ready for, the first offers are already being sent out. From 1 July, we can operate a Wtp scheme. This involved some hard work behind the scenes. Customers have until 1 January 2028 to switch to a scheme in line with the new pension law. However, the entry age will be lowered to 18 years from 1 January 2024. That is a first step that will have to be taken. We are already preparing that.”

This interview appeared 15 June on AMweb.