Will we manage to finalise the design of the new pension scheme by the end of this year? "We hope so, but it is still a big challenge. Especially at the moment, some very important parts are still being tackled," explains Ron Verhulst, J&J's pensions manager in the Netherlands.
Like the J&J pension fund, all the pension funds in the Netherlands are working on new pension schemes. This is proving to be a tough undertaking. Ron points to the frontrunners; pension funds that want to be the first to launch their new schemes in early 2025. "The majority have decided to postpone the start for six months. Translating the new rules into practice, balancing everyone's interests; all in all, it is a tough, time-consuming process. Certainly not a piece of cake."
Ron is experiencing this up close. He leads the 'E+E (Employees + Employers) working group', preparing the transition to the new scheme and putting forward preferences for it. The working group includes representatives of the employer, the Central Works Council (COR) and the Pension Council. Advisors from the various parties also regularly take part in the sessions. Ultimately, the Pension Council will make recommendations to the employer and the COR. The process after that is as follows: the employer comes up with a proposed decision and asks the COR for its consent. If the COR agrees, the employer takes a final decision and the new pension scheme becomes a reality.
Agreement on basic elements
A number of basic elements of the new pension scheme have been agreed within the working group. The two most important are:
- On the type of contract. The preferred option is a flexible arrangement for the accrual phase and a collective benefit phase. This approach offers participants several choices. For example, they can choose whether they want a fixed or variable pension benefit when they retire later.
- On whether or not to introduce a risk-sharing provision. The provision could provide more stable benefits in some cases. According to the working group, there are too many potential problems with this. Especially in the early stages of the new scheme, it requires contributions to be paid but it is not clear whether participants will benefit. If they change employers and 'move' their pensions with them, their share in the risk-sharing provision does not go with them.
Three hot items
The main parts still under discussion are: the premium contribution, compensation and how to deal with accrued pension rights. Ron: "These are the most sensitive topics. Intensive information sessions are currently being held on these. First, the working group is looking into these issues and indicating its preferences, then the Pension Council will be issuing its recommendations, and then it will be up to the employer and the COR." Ron calls it a crucial phase on the way to the new scheme. According to him, there is no way to predict now how much time will be needed before a final decision is taken. "Maybe at the end of this year, maybe next spring. It's impossible to say."
View from pensioners
How do pensioners view the process? Theo Elsendoorn represents the pensioners on the Pension Council. He says the whole process is extra complicated for pensioners. "That starts with the status of our fund. As a European pension fund, we are based in Belgium. We have to comply partlywith Dutch rules and partly with Belgian rules. For us as pensioners, this creates a lot of uncertainty and makes it difficult to stand up for our rights. Partly for this reason, a 'sounding board group' has been set up that regularly consults with employers, the COR and the Pension Council, so that the voices of pensioners are also made more audible.
The indexation of pension benefits is an important aspect for Theo. ''Our pension scheme has always had a good accrual phase. Until 2016, we even had a final-pay scheme (which then changed to an average-pay scheme). So we never made a big issue of pension benefits not being indexed in the years when that inflation was very low. Since then, however, inflation has skyrocketed and many pensioners have suffered a big loss of purchasing power. ''For pensioners, two elements are important that they would like to see included in the creation of the new scheme: a good indexation scheme and the distribution of the buffer the pension fund has.''
Schedule
The aim is still to introduce the new scheme by 1 January 2027. The implementation of the new scheme will require 1.5 to 2 years of preparatory work (including setting up the ICT systems for administration and investments). To meet this schedule, an agreement early next year is desirable.
Ron, do you have a final message for the participants?
"I cannot stress it often enough: make sure we can reach you, your details are correct and your correct private email address is known to us. You can check this and amend it if necessary in My Pension under My Details. That way you won't miss any updates from the working group. You can also read the E+E updates sent earlier in My Pension."
“Also regularly check our Pension Agreement pages. Here you will find lots of information and can watch the webinar "Your pension is changing". You will also easily find all news releases about the new pension system.'' |
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Ron Verhulst
J&J Pension Manager in the Netherlands |
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Theo Elsendoorn
Member of the Pension Council representing pensioners |
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