Start modifying your pension scheme in time

10 July 2023


The new pension law took effect on 1 July. But what choices do you as an employer need to make? And when is the best time to start?

‘My message would be: talk with your pension adviser and your employee participation or works council in good time,’ says Dave Beerepoot, Product Manager at pension provider BeFrank. ‘Then you can draw up a plan together and set out in it what choices you are making, and how you will involve your employees.’

What do you choose?
Because Beerepoot is clear that there are choices for employers to make. The first question is: when do you decide to switch to the new ‘Wtp regime’? Will you take advantage of the transitional right to delay the choice a little longer? Or are you going to switch as soon as possible? And will you do that for your entire workforce? Or only for your new employees? 

Natural time
The most natural time to take action is when your current contract reaches its end, he argues. ‘So between 1 July of this year and 1 January 2028. That is the logical time, since you will be talking to your pension adviser anyway. But my advice is definitely: start in good time. Contact your adviser so they can also set time aside. And you also want to have time to organise consultations with your employees. So that everyone knows in good time what is going to happen.’

It’s a good idea to draw up a ‘transition plan’ with your pension adviser. In this you can then calculate together how the old and new schemes compare, amongst other things. ‘You can’t just introduce a scheme in which employees lose out,’ explains Beerepoot. ‘But there are various ways to compensate for that. In terms of pension, but also in extra salary, for example. We are hearing a lot in the market about the latter in particular.’

In a transition plan you lay out the consequences of the new scheme for each age group, he says. ‘Because a 20-year-old may gain from it, while a 60-year-old may not, for example. In such a plan you can set out how you will deal with this, with the goal that no one loses out. You can then agree all that within the triad of adviser/employer/employees.’

Dave Beerepoot

As an employer it is therefore a good idea to obtain information from your adviser now, stresses Beerepoot. ‘So that you won’t be surprised later when there might be less time. So particularly ask your adviser for a timeline, in which you can also determine the best time to involve employee organisations, so that everyone knows what is going to happen when.’

Entry age
A great deal is changing anyway for employers on the pension front over the coming period, he says. For example, you can currently still set an entry age between 15 and 25. From 1 January that will be restricted to 15 to 18. This means that 19-year-olds, for example, should also start building up a pension, even if they are not currently doing so at your company. ‘This is therefore something that many employers need to amend not only in their pension schemes, but also in their employment contracts,’ says Beerepoot.

Abolition of waiting period
Another change which takes effect on 1 July is that the ‘waiting period’ is being abolished. Employers who previously stated in their contracts that employees would only start accruing pension after 6 weeks, for instance, are therefore no longer allowed to do so from this year. This is another change that could directly affect the employment contracts you already have as an employer. Although Beerepoot notes that it is a change that not many employers have to deal with. ‘Such an arrangement is already unusual. Workers still sometimes encounter it, particularly at secondment and temporary employment agencies. But as far as I know, that has already diminished a lot in practice.’

Something will change for everyone
And there will probably be more changes like that, he says. ‘Some motions were passed during the Senate debate which have yet to take effect. So the topic will remain in flux for some time; it’s certainly not done and dusted.’ And he adds: something will change for everyone. ‘Definitely don’t think: we have a defined contribution scheme, so not much will change for us.’

Understanding options
His main message is therefore: as an employer, make sure you are aware of the options you have. By using BeFrank’s Selection Tool, for example, which allows you as a BeFrank customer to get an instant indication of the impact of the new system on your pension scheme, which you can then use to talk to your pension adviser. ‘And definitely don’t forget to include your employee organisations in the process,’ he stresses. ‘Because ultimately it also affects the employees’

This article appeared on on 4 July.