Pension transition plan

Pension transition plan obligatory for every employer

As a result of the Pension Agreement, maximum pension accrual is no longer the norm, but maximum premium payment is.

The bottom line is that every employer must reach an agreement with its employees (and works council) on the amendment of its pension agreement. The employer is required to justify the changes concerning pensions in a pension transition plan, explaining why, in the opinion of the employer, this is a well-balanced pension transition. Next, pension providers – such as pension funds, premium pension institutions and insurers – will set to work on the implementation of these changes. The new pension must be implemented by 2027/2028.

Right of approval of the WC, EC and GME

The transition plan defines the basic principles on which the change is founded. The plan is submitted along with the request for approval for the amendment of the pension agreement to the works council (WC), employee council (EC) or general meeting of employees (GME). However, if trade unions are involved who are responsible for the content this will be different. Trade unions do not always have decision-making powers over all aspects of a pension scheme, even if there is a collective labour agreement in place. It is therefore of paramount importance that this is thoroughly checked before you enter into negotiations. For more information please read the article ‘Advisor to the Works Council‘.

Tasks

The milestones determining when the various components of the pension transition must take place are set out in the diagram below (it concerns the scheme for a pension fund):

• 1-1-2025: Change process, employer’s pension transition plan
• 1-7-2025: Implementation plan of the pension administrator
• 1-1-2027: Implementation (target date, no later than 2028)

Timeline of the Pension Transition

An insurer or premium pension institution can already make a proposal. An employer, however, is better off taking the initiative independently. After all, pensions are an important employment condition between employers and employees. The role of the pension administrator is restricted to executing the pension. The responsibility for the transition plan also lies with the employer.

Customization is the standard!

Customization is often more cost-effective and better in the long run. Therefore, the best option is to determine your own agenda and not waiting too long. Agreement can only be reached with employees (and works councils) after all parties involved have received all the information they need, presented in a manner that can be easily understood. That may take a lot of time, but it will save a great deal of hassle later on.

Content of a transition plan

The pension transition plan should cover at least the following aspects:

• The pension contract that was chosen: a new pension contract with more solidarity features, or an improved premium agreement with greater individual freedom of choice;
• If this concerns an industry-wide pension fund: the way in which existing pension entitlements and pension rights are dealt with, including whether or not existing entitlements will be retained and the considerations on which this decision is based;   
• The effects of the new contribution scheme, defined per age group and including all types of pensions: old-age, survivor’s and disability pensions; 
• Satisfactory rules to ensure that the transition is well-structured in order to ensure adequate pension compensation;
• A financing plan for this compensation, which is mandatory and whose governing principle is cost neutrality for employers and participants;
• Insofar as applicable, the agreements made and the initial application of the solidarity reserve.

Avoiding any duplication of effort

If a renewal of the current administrative agreement and/or amendment of the pension agreement is pending, it is wise to take the upcoming pension transition and the pension transition plan into consideration. This will preclude any need for repeating the same, often labour-intensive process within a few years.

Advice on your pension transition plan

Would you, as an employer or works council, like to engage the services of an independent pension advisor for your pension transition plan works independently of pension administrators and uses his time effectively to arrive at the best solution for your pension issues? If so, do not hesitate to contact pension law consultant Dirk-Jan Plate.

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