It is time to get going with the new Pensions Act

Now that the new Pensions Act has been in force for six months, it is time for employers to start working on it, says Bart van de Wouw, pension advisor at ABAB. ‘Throughout the market, I still see many organisations putting this off.’

Retirement is still a distant concept for many employees for which they find it hard to generate interest – despite its importance. Remarkably, more or less the same often applies to employers, notes Bart van de Wouw. He is one of six pension advisors at ABAB, a large accounting and consulting firm operating mainly in the south of the country. Although the Future of Pensions Act officially came into force last summer, the number of employers currently actively dealing with it is still small, he notes. ‘You see many organisations still putting this off.’ While this is not wise, he stresses: ‘If you don’t want to turn it into a rush job as an employer, now is the time to jump on the bandwagon.’

War for talent

ABAB ‘services’ ‘between 250 and 300 employers in the area of collective pensions. Especially in the current war for talent, Van de Wouw says it is important to place this topic firmly on the agenda and have an impact analysis done of what the law means for your organisation. ‘Some employers think that they’ll deal with it in 2027, because existing pension schemes have to be changed by 1 January 2028. It is then up to us to explain that you build a portfolio like this in layers and you have to get started in time. You really need to feed the pertinent information to employers. Not by making it extra complex, but by making sure the portfolio is on the radar.’

Personal choice budgets

In the current tight labour market, he sees many employers wanting to see their individual pension scheme integrated into personal choice budgets. Van de Wouw: ‘Young participants don’t always just want to save for their retirement; they also want to be able to get a second mortgage or additional education, for example. With well-organised companies, you often see that they have a scheme which allows people to make that choice themselves.’

Change in terms of employment

As for the new pension law, Van de Wouw himself was happy to see the ball get rolling last year. ‘We were looking forward to it for so long. So at some point you really want to get going on it.’ For him and his colleagues, that meant explaining quite a lot to clients. Often to the HR department, and sometimes also to the works council. ‘Or to another workers’ representation body, if they have one. Indeed, because it involves a change in terms of employment, those bodies have been given an important role with regard to a new pension scheme.’

Natural moment

The work of Van de Wouw and his colleagues often consists of a kick-off session, where they explain to the client what is happening in the area of pensions and the choices facing the organisation. ‘Throughout the market, you can see that many employers are waiting to make the transition until their current pension contract expires – the natural moment, so to speak. This is also quite reasonable, but even then you still need to do the necessary preparatory work to achieve that. If you want to do it right, you have to take at least one year to get everything done.’

Selection Tool

When it comes to communicating with employers, he fortunately gets some help from pension administrators, such as with the BeFrank Selection Tool. ‘We are independent advisors,’ he stresses. ‘We want to offer employers the full choice of options. But it’s very nice if administrators offer such a service and also want to cooperate with advisors with respect to planning for their employers, for example. Of course, you have an advantage in this case.’

Compensation issue

Creating urgency among employers is thankfully improving, Van de Wouw sees. He says it also helps that the topic of pensions regularly makes it into the media. ‘Although there is still a lot of uncertainty about the exact details. It makes a difference, for instance, whether you are compulsorily affiliated to an industry pension fund or have your own pension scheme. And whether, in that case, you opt for so-called ‘grandfathering’, whereby only new employees will get a new scheme. Or whether you prefer to go for a new scheme with a flat rate for all, which also involves a compensation issue. This can have a big financial impact for smaller organisations in particular.’

Engagement

ABAB supports employers, among other things with sessions where participants collectively download a pension app. ‘Then it takes on more life. During the presentations we give on this, everyone is sitting with their phones in their hands looking at the possibilities. It’s very nice to see what happens there.’ It is one of the things employers can use to differentiate themselves in this area, Van de Wouw stresses. ‘Among young people, retirement is often particularly low-interest. But you want to engage them. This way it’s still possible.’

Sustainability is gaining ground

Van de Wouw is also seeing another development among the younger target group in particular: they are less and less just about money. ‘Sustainability is also increasingly becoming an issue,’ he notes. ‘Employers are more and more asking for this themselves. Companies no longer feel forced to deal with sustainability but actually want to. By the way, as a pension administrator you not only have to be able to properly organise that topic, but also to clearly illustrate it. BeFrank does this, for example, by providing insight into your CO₂ savings in the app. This makes it real for people. It also makes the conversation you have with clients much broader. If you don’t deal with this, I think it’s also a real missed opportunity. Be good and tell it. And, of course, this in turn helps you stand out in the labour market.’ ‘A pension,’ he concludes, ‘is, after all, a “pricey” term of employment, which by no means always gets the appreciation it deserves.’

This article appeared on MT/Sprout 14 February