New pension law: these are the implications for employers
Due to the aging population and the changing labor market, the rules regarding pensions are being updated. The new pension law is currently being considered by the Senate and, if approved, will take effect on July 1, 2023. This law will bring more flexibility, personality and transparency to the pension system and make contributions more predictable for employers and employees.
Pension providers have until Jan. 1, 2027, to adapt existing pension agreements to the new law. If your company is covered by a collective bargaining agreement, new pension agreements will be made by employer organizations and unions. If you arrange the pension for your employees yourself, you will have to make new agreements with your pension provider.
What remains the same?
Many things remain the same in the new pension law. For example, the state pension remains unchanged and employees can still accrue supplementary pensions through their employers. Employers contribute monthly to the pension fund in the form of a premium. A portion of this premium is deducted from the employee's salary each month as the employee portion. The way pension providers operate also remains the same: they invest the money that comes in and pay out monthly to retirees.
What will change?
There are a number of changes to pension contributions. For example, the monthly premium for everyone who accrues pension will become a fixed percentage of salary. Also, the premium no longer depends on the employee's age.
In addition, the supplementary pension will become more flexible, transparent and personal. The pension will soon move with the economy. That means that when the economy is doing well, the pension will go up. Is the economy not doing as well? Then the pension will go down. There will be rules to prevent pensions from falling too fast.
Every employee will soon have their own pension pot. This will make it more transparent how much pension someone accrues and what that means for retirement later. Is an employee going to work somewhere else? Then the pension pot will automatically move with them.
What should you do as an employer?
As an employer, are you a member of a collective bargaining agreement? Then you don't have to do anything for the time being, because unions and pension providers are doing the preparatory work. This means that they make new pension agreements and inform employees about them. If as an employer you are not a member of a CLA, you will have to make your own agreements.
If you manage your employees' pensions yourself, you must choose whether your staff will use new pension arrangements or the transitional arrangement. With the transitional arrangement, the current pension agreements remain in force until an employee leaves your employment. Employees who are newly employed do immediately fall under the new agreements you make with a pension provider.
As an employer, there are also a number of choices to make regarding the new pension plan, such as:
- As an employer, how much premium do you pay and what amount of it do you deduct from wages?
- Does the pension provider invest the contribution for each employee separately or for all employees together?
- How much risk does the pension provider take when investing?
Update May 30, 2023: On May 30, 2023, the Senate passed the Bill on the Future of Pensions Act. This means that as of July 1, 2023, all pension plans must start complying with this new law. For more information, see our page on the new pension law.
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