Seventy-nine per cent of Dutch employers that provide pensions through an insurer or premium pension institution (PPI) are opting to delay the transition until the deadline, or are using deference as a strategy to transition, according to research by Aon Netherlands.

Although 80 per cent of employees in the Netherlands are members of a compulsory pension fund, the remaining 20 per cent fall under the free market, where employers take out a pension scheme with an insurer or PPI.

With these schemes, it is up to the employer to decide when and how to switch to the new pension system, as a collective transition rule does not apply.

The research found that 44 per cent of employers in the free market plan to delay the transition until the 1 January 2028 deadline, while 35 per cent are opting for deference, whereby existing employees keep a rising premium and new employees get a flat premium.

The remaining 21 per cent are opting for a full transition to a flat premium for both existing and new employees. In this group, compensation is often offered to existing employees because their expected pension outcome is lower with a flat contribution rate.

Commenting, Aon Netherlands director wealth, Frank Driessen, said: "By identifying now which transition choice best suits the organisation and its employees, employers can better inform and guide their employees through the process.

“This prevents surprises and provides scope to take compensatory measures where necessary for groups that may receive lower pension accrual.”

Furthermore, Aon also highlighted the stark difference in the level of premiums in the free market compared to compulsory pension funds.

For example, generally the statutory maximum premium is 30 per cent. In pension funds, the premium varies between 25-30 per cent (including employee contribution and implementation costs). In the free market, however, the average premium is 18 per cent, about 35 per cent lower than in pension funds.

The coverage of the survivor's pension is also lower in the free market: 28 per cent of salary on average, compared to 34 per cent in pension funds.

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