New pension law and the defined contribution scheme

The new pension law came into effect on July 1, 2023. This law also has far-reaching consequences for employers with an insured pension scheme. In this article, we list the most important points for companies with a defined contribution scheme with increasing contribution percentages.

Transitional phase of new pension law

A transition phase of several years started on July 1, 2023, in which employers and employees will first make agreements about adapting their pension scheme to the new pension law. Pension providers will then implement these agreements. 

Difference between pension funds and insured schemes

The impact is different for employers who are affiliated with pension funds and employers who offer an insured person schemes with an insurer or PPI. The insured and PPI schemes are usually more in line with the new rules. This is because these schemes are often based on a defined contribution. Insured pension schemes are also already individual and personal. 

What changes for employers with an insured or PPI scheme?

In the new pension system, the same percentage of the pension basis applies as an annual defined contribution for every participant, regardless of age. Nowadays there is often an increasing premium percentage linked to age. Employers with an insured or PPI scheme with an increasing premium percentage must switch to a flat premium percentage. The survivor's pension will also change. That will be a fixed percentage of the salary. This will apply to all employees and must therefore be adjusted in every scheme. 

Three options for employers with an increasing premium scale

It is clear: the pension scheme must be adjusted in any case. There are three options for existing employees before the transition. There are pros and cons to each option.

1. Maintain increasing graduated premium percentages for existing employees (transitional arrangement).
2. Switch to a flat premium percentage, with compensation in the form of additional pension contributions.
3. Switch to a flat premium percentage, with compensation in the form of a gross component on the payslip. 

Transitional arrangement for employers

The first option mentioned above is possible through a transitional arrangement. This scheme means that employees who are already in a premium scheme with increasing premiums may remain in it. The mandatory flat premium only applies to new participants in a pension scheme. 

Adjust pension scheme for the new pension law

How the pension scheme should be adjusted depends on the current scheme, structure of the employee population, budget and vision. As an employer, you must choose the option and implement the adjusted scheme. This also requires the consent of the Works Council and/or employees.

The pension specialists at pension.com are happy to help you. We also take care of communication with employees. Please request a quote so that we can contact you and schedule an appointment.