Over 1.6 million Dutch workers face major tax bills if pension transition delayed
More than 1.6 million Dutch employees with pensions through insurers could face substantial tax consequences if their employers fail to update their plans before 2028.
The government’s Pension Transition Commissioner, Fieke van der Lecq, warned that delays in switching to the new pension system could lead to steep income tax bills. “Many employers will be too late if this continues,” she told NOS, urging workers to pressure their bosses. “This is necessary to prevent a significant portion of accumulated pension savings from going to the tax authorities.”
Under the current rules, income tax is only due when pension payments begin, usually at a lower rate than during employment. Starting in 2028, however, outdated pension insurance will be treated as a lump sum of income, subject to immediate taxation plus interest for years of unpaid tax. Additional wealth taxes could also apply, potentially affecting deductions and benefits.
Approximately 20 percent of Dutch workers rely on pension insurance rather than pension funds. These arrangements are often used by small and medium-sized companies with 10 to 250 employees, creating roughly 57,000 contracts between employers and insurers, according to De Nederlandsche Bank. All these contracts must be transferred to the new pension system, giving employees a clearer view of their personal pension situation.
So far, only about one in five contracts has been updated. Insurers expect that half of the remaining contracts will be transitioned only by the January 1, 2028, deadline.
“It is very important that employers do not wait too long and contact an advisor while involving employees,” the Dutch Association of Insurers said. “All employers should actually be working on this by early next year.”
Pension advisors, who manage the transitions for employers, report slow progress. Enno Wiertsema, director of Adfiz, the industry association for pension advisors, said, “If everyone postpones and waits too long, insurers and advisors cannot handle the peak workload.” Advisor numbers are also shrinking, falling from 4,800 to 4,100 this year, according to PensioenPro.
Employers could face penalties from the Dutch Tax and Customs Administration for failing to properly manage pension contributions. Delayed transitions may also strain relationships with employees, who can demand access to their pension funds directly, potentially creating a serious financial burden for the employer. “Ask your boss when the new pension plan will be implemented,” Van der Lecq urged.
