Human capital & corporate risk
On 1 July 2025, the Future of Pensions Act (WTP) will be two years old. This means that the end of the transition period is also in sight. The transition period currently ends on 1 January 2028, and as of this date, all pension plans must be adapted to the WTP. Also your pension plan.
Most larger pension funds appear to be well underway and indicate that they will focus on 1 January 2026. The biggest concern is for employers who are not affiliated with a pension fund but have placed their pension plan with a pension insurer or premium pension institution (ppi). This concern is publicly expressed by the DNB, the AFM and other organizations involved. Indeed, practice shows that many of these employers have not changed their pension plan yet.
Is this concern justified? That's what it's starting to look like by now!
Many employers have not started the actual transition yet. More worrying, however, is that many employers also do not have a plan of action yet. That is, to say the least, very remarkable, for several reasons:
Making your own pension scheme “WTP-proof” leads to higher costs. These higher costs can be found, for example, in the form of higher risk premiums for the insured survivor's pension.
Depending on the scenario chosen (respectful effect or harmonization), (significantly) higher costs related to the accrual of retirement pensions should also be taken into account.
In addition, higher charges are to be expected for assisting the employees involved in the form of pension communication and choice guidance. In doing so, a distinction must be made between transition and ongoing communication. Transition communication is aimed at guiding employees from the 'old' to the 'new' arrangement. These costs can be budgeted as a one-off, in contrast to the costs of ongoing communication. This communication is aimed at continuously assisting employees in making the most appropriate choices within the pension scheme for them.
All in all, the financial impact can be significant. It is very likely that at some point (for example) the Supervisory Board and/or the underlying Private Equity organization will ask the employer what its own “WTP transition plan of approach” is and whether the financial impact of the “WTP transition” is now known at management level. If, in this phase of the transition period, the employer concerned must deny the existence of such a plan and remain guilty of the answer about being informed about the financial impact, then this employer has a serious problem.
Although based on urgent legislation, the Works Council has the right to consent. After all, making the pension scheme “WTP-proof” leads to a changed pension commitment. It quickly takes a period of at least six to eight weeks to obtain consent.
Practice shows that rapid approval from the Works Council is not easy. A discussion about the amount of the fixed percentages of accrual of retirement pension and insured survivor's pension to be maintained or the design of a possible compensation measure is not unlikely.
In project planning, also take into account the obtaining of consent from the individual employees. It also quickly takes the same time frame of six to eight weeks to obtain this consent.
In summary: time is running out; having a “WTP transition plan of action” and getting to work with it is an absolute necessity!
Every office of pension advisors and administrators is now quite busy. Making the pension plan “WTP-proof” is not only subject to consent, but there is also an obligation to seek advice from a certified pension advisor. And now, the comparison between the number of pension plans that can be adjusted on the one hand and the advisory capacity on the part of pension advisors on the other hand results in a “skewed balance”. And also keep in mind that pension administrators will eventually no longer be able to provide pension proposals, regulations and contracts adequately.
It should come as no surprise that we call for starting the project 'Impact Act on the future of pensions on your own pension building' as soon as possible. Make a thorough plan that allows all stakeholders involved to trust a smooth and timely process. Within such a plan, being informed about the financial impact is 'step 1'.
We wish you a successful project 'Impact Act on the Future of Pensions on Your Own Pension Building'.
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