The Minister of Social Affairs and Employment recently published an “outline document” explaining how to implement the Pension Deal concluded in June 2019. With the minister’s plans having gained wide support, after ten years of deliberations, it seems likely that pension reforms will finally take place.
The biggest change is the mandatory shift from DB to DC. The current system of fixed pension accrual independent of age will be replaced by age-dependent accrual. This change will be triggered by an amendment of the current tax treatment of pensions. The outline document sets clear milestones that will be incorporated into law and will have to be met by employers and pension providers. The transition needs to be finalised by 1 January 2026. Before then, pension funds must meet their mandatory and required own capital requirements under the current law. Even so, the Dutch government is likely to use its exemption powers to avoid major cutbacks of pension entitlements if sufficient progress is made in implementing the Pension Deal.
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