Sufficient Time for Transition to New Pension System

Mariëlle Paul, Minister of Social Affairs and Employment: “By January 1, more than half of the pensions will have transitioned to the new system. This is an important milestone. They will receive a pension that increases more easily, is more transparent, and better reflects the fact that people no longer work 40 years for one employer. Over the next two years, the remaining pension schemes will make the transition. This legislative amendment provides sufficient time for a careful transition.”

The Future Pensions Act stipulated that pension funds had until January 1, 2027, to transition to the new system. The change of this deadline was already promised to the Senate during the bills consideration. The law on Extending the Transition Period to the New Pension System removes that date from the pension law and now regulates the date in a General Administrative Order (AMvB). Along with this law, the cabinet issues a general administrative order extending the deadline to January 1, 2028.

The new system maintains the principle that pensions are built collectively and financial risks are shared. It remains a collective and solidarity-based system. Employers and employees pay premiums, and pension providers invest that money so that the premium grows in value. In the early decades of this century, most pensions hardly increased. In the new pension system, smaller buffers are maintained, allowing a larger portion of each euro paid in, plus the returns generated, to go toward pension benefits. And the buffers can be used more purposefully.

The new pension law also ensures it is clearer and more personal how much pension has been accrued. A participant’s pension is now based on all premiums paid on their behalf, plus the returns on that money. In the previous system, most pension was accrued at the end of the career, and pension funds were redistributed from young to old. Changing jobs or unemployment had greater consequences at the end of the career. The new law better aligns with the fact that people nowadays no longer work forty years for one boss.