The Dutch Senate will start scrutinising the Law on the future of pensions (Wet Toekomst Pensioenen – WTP), which was recently approved by the country’s Second Chamber, on 17 January in a process that is likely to last several months.
The law that cements the transition from a defined benefit (DB)-based pension system to defined contribution (DC) was approved by the Second Chamber on 22 December with 93 MPs voting in favour of the law, and 48 against it. Nine members were absent during the vote.
Coalition partners VVD, D66, CDA and ChristenUnie were joined by opposition parties GroenLinks, PvdA, Volt and SGP in voting for the switch to DC, resulting in a comfortable parliamentary majority.
Amendments
Securing the support of left-wing GroenLinks and PvdA was vital for pensions minister Carola Schouten, as the government needs at least one of these two parties to secure a majority in the Senate.
The pair had made their support to the law conditional on government backing of three amendments to the pension law.
These required the government to halve the number of working people not accruing a pension to 450,000 in five years’ time, the lowering of the starting age for workers for accruing pensions from 21 to 18 and the abolition of the mandatory ‘waiting time’ for temporary workers.
No carve-outs
The wish of several other opposition parties as well as some pension lawyers to allow carve-outs for individual pension savers or groups of members has not been honoured by the government.
If social partners decide to make the transition to the new pension system, members will not be given the opportunity to appeal against the conversion of their accruals from DB to DC either.
Pension funds as well as social partners find grandfathering accruals in the DB system, as was for example been done in the UK, undesirable.
This would need only lead to a fractured, more expensive system overall, but will also make those who remain in DB worse off over time, they contend. Funds that will no longer receive new accruals will have to reduce risk over time, diminishing return prospects in the long run.
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