Senate approves new pension system; Important step, Minister says

Minister Carola Schouten can implement the law that makes the new pension system possible. A majority in the Eerste Kamer, the Dutch Senate, supported the law. In addition to the coalition parties VVD, D66, CDA, and CrhristenUnie, the bill received support from PvdA, GroenLinks, and SGP. Schouten called it “an important” step that the Senate has also agreed to the new Pensions Act.

The new law provides the legal basis for one of the largest social reforms in recent times. Pension funds will get more time to prepare. During the debate in the Senate, Schouten promised that funds would have until 1 January 2028 to switch to the new system, a year later than the previous deadline. Moreover, she made it easier to further postpone that deadline if it proved necessary.

Dutch pension assets (hundreds of billions of euros) are moving from a collective pot to largely individual pots. The switch to this new way of accruing pensions may cost tens of billions of euros, and it is not yet entirely clear how the new system will work out for specific funds. However, many parties see that the pension system in its current form is outdated. The new system is more flexible and better suited to the current labor market. In times of economic prosperity, more pensions can be paid out more quickly, and cuts can happen sooner in the event of poor stock market results.

Opponents of the new system tried to arrange a postponement of the vote at the last minute. SP Senator Tiny Kox pointed to the new law's effect on the pension scheme for political office holders, including parliamentarians. For that reason, according to the constitution, it requires a two-thirds majority to pass, said Kox. That two-thirds majority wasn’t achieved in either the Eerste Kamer or the Tweede Kamer, the lower house of the Dutch parliament. Proponents of the law argued that it was merely a technical adjustment that did not directly affect parliamentarians and other officeholders.

The vote on and treatment of the pension law in the Senate was not entirely uncontroversial. On Tuesday, the day of the vote, the new Senate was also elected by members of the Provincial Councils, among others. The new Senate will be sworn in in two weeks. Opponents believe that the new Senate should have considered the law. The proponents of the law also have a majority in the new Senate.

Minister Schouten (Pensions) called it “an important step” that the Senate has also agreed to the new Pensions Act. With this law, we ensure that our pension remains properly arranged,” said the Minister.

According to Schouten, this applies to people who have already retired but also to people who are still working now and to future generations. In the new system, pension accrual will be more personal than in the current system.

The new pension system has been discussed for years, first between employers and trade unions, then in the Tweede Kamer, and now in the Senate. Scouten said she feels a “great responsibility” for a careful transition.

The new pension law will take effect on July 1. The transitional phase of a few years that starts then is intended for employers and employees to make agreements about adjusting their pension scheme. It is then up to the pension providers to implement these agreements.