Netherlands to apply ‘transition period’ for pensions until new contract is introduced

The Dutch Minister for Social Affairs and Employment, Wouter Koolmees, has confirmed that he is looking into a ‘transition period’ to protect pensions until the new pension contract comes into effect in 2026.

In a letter to the House of Representatives, Koolmees explained that the details of the transition period will be “established at a later date for the years 2022 to 2026”. Pensions schemes have protection in place until the end of 2021, following the introduction of a temporary minimum funding requirement introduced last year of 90 per cent, down from 100 per cent.

The latest figures from Aon’s Pension Thermometer found that as of August the average funding ratio was 95 per cent. However, Aon warned there may still be some funds that remain below the 90 per cent limit and there is a chance that limited discounts will be implemented at the end of this year.

Commenting on the minister’s plans, the Dutch Pension Federation said the transition scheme “offers funds more time to restore their financial position”. Referencing the letter, the federation said the minister sees the need for a different financial assessment framework for the period of transition to the new pension system (2022-2026).

The minister included goals and principles for this transitional financial supervisory framework (transition-ftk) in the letter. For example, he aims to “offer perspective on the new system during the transition, encourage the transition to the new system and bring about a gradual recovery to a healthy financial position”.

The Ministry of Social Affairs and Employment is working on the transition-ftk in close consultation with the parties that have concluded the Pension Agreement, with the regulators and with the federation. Details of the transition-ftk will be set out in the bill on the pensions agreement. The consultation on this bill is expected at the end of October.

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