New pension law approved by Upper House of Parliament

On 30 May 2023, a majority of the members of parliament in the Dutch Upper House voted in favour of the Future of Pensions Act. The bill was passed without any major changes, but the Minister did promise to push back the deadline for implementation of the law from 1 January 2027 to 1 January 2028. This means the pension funds will have until 2028 to transition to the new pension system.

The new law has three significant goals: to accelerate growth of supplemental pensions, to create a more personalised and transparent system for pension accrual, and to ensure the pension system is more compatible with the changing job market, where people no longer work for the same employer for forty years.

What is going to change?

Under the current system, pensions were barely increased in recent years. In the new pension system, pension administrators will have more freedom to increase pensions using returns made on the pension fund’s investments. This also entails that pensions can be cut back if returns on investments are lower than expected. The new pension law provides for buffers to absorb these fluctuations. Moreover, pension accrual at individual level will be more transparent and personal, based on the contributions paid into the pension fund and the returns on investments made with that money.

Another important change is that the contributions employees pay into their pension funds throughout their careers will go into their own pension capital. In the previous system, most of a person's pension was built up towards the end of their career, meaning younger generations were in fact subsidising older generations. This had a significant impact on employees who switched jobs or became unemployed later in life. The new law is more compatible with today's reality that people no longer work for the same employer for forty years.

What will stay the same?
The new law is retaining the principle of collective pension accrual and shared financial risks. Employers as well as employees pay pension contributions, after which pension administrators invest these contributions and pay out pension benefits.

Going forward

ING CDC Pensioenfonds is closely monitoring the debate on the future of pensions, but it is not authorised to change the contents of the pension plan. The social partners, such as the employers and the trade unions, are responsible for making agreements regarding the terms and conditions of the pension plan. The pension fund will then assess whether the decisions made by the social partners are justifiable, suitable for administration and well-balanced for all participants alike. 

Moreover, we are carrying out a participants’ survey to ensure the new pension plan will be in line with the preferences of our participants. 

More information
ING CDC Pensioenfonds will keep you informed of the latest news via its website and its newsletters.