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Advisor to the Works Council

If your works council needs pension advice you can engage an independent pension consultant. In many cases, the necessary budget to be allocated for this has been agreed upon with your employer. Dirk-Jan Plate of Pensioenlogica provides pension advice after an in-depth study of all legal issues and explains all the possibilities and rights that a works council has in plain language.

Right of approval regarding pension amendments

Works councils are invested with a right of approval regarding pension amendments. However, if the pension fund is part of a CLA, a works council will, generally speaking, not have such a right. But is this really true? If there are any decentralization provisions in place, a works council may nevertheless have a right of approval and be entitled to join the trade unions in the relevant negotiations. This way, the works council will also be given a say in the decisions. In other words: in the above situation the trade unions will make decisions with regard to the big picture, while the works council will decide on the details. The idea behind this is that agreements at decentralized level engender growing support for the decisions made. After all, a works council is the body that is most aware of what is actually going on within the ranks of an organization. It is therefore wise for a works council to obtain pension advice in order to retain a clear overview of what is going on during the amendment procedure.

Changing from pension to contribution

If a pension (a defined-benefit scheme) is executed by an insurance company and the implementation agreement between the employer and the insurance company expires, the new proposal will include an increase in contribution of 50% on average due to the current low market interest rates. As a result, employers will generally propose a defined-contribution scheme. This means that future pension prospects will be replaced with a contribution agreement. This doesn’t have to be a problem as long as the contribution to be paid does not remain at the old level. Because of the low market interest rate pensions have become more expensive. Sticking to the old budget results in a delay in future accrual and transfers the risks to the employee. These are two sides of the same coin. If any changes are made to your pension, the only way to compensate for retrenchment with regard to your future pension accrual is by benefiting from good investment results during the accrual period and a market interest rate that is much higher on your retirement date than it is now. Otherwise, the difference on account of the current low market interest will come out of the employee’s pocket. Previously, this risk was born entirely (or largely) by the employer. Should a defined-benefit scheme be converted into to a contribution agreement, the risks are transferred from the employer to the employee. Therefore, it is a good idea to be vigilant. Make sure that you are well informed: you have more rights than you think. From a legal perspective, reducing future pension accrual by holding on to the old budget has never proven to be a good argument. Fortunately, there is no need for things to come to this. A possible alternative scheme is a more obvious choice. How can employees and their employer come to a satisfactory conclusion in all reasonableness? This is one of Pensioenlogica’s specialist areas.

Do you have any questions or would you like to make an appointment? Contact Pensioenlogica today!