New Dutch pension legislation requires employers to take action
The new Future Pensions Act (Wet toekomst pensioenen, or Wtp) introduced in 2023 will bring radical changes to the Dutch pension system. International employers who have a pension scheme for their employees in the Netherlands must also check whether this scheme complies with the new statutory requirements. Existing pension schemes must be brought into line by 1 January 2028 at the latest. Although this deadline may still seem a long way off, it is advisable to start preparing well in advance.
International employers remain responsible for pension scheme
Many international employers assume that Dutch pension providers will automatically implement any necessary changes. However, this is not always the case. Employers remain responsible for the content of their employees’ pension scheme, as well as for ensuring compliance with tax and employment law regulations. Furthermore, changes to the pension scheme may affect the terms and conditions of employment, necessitating consultation with employees or the works council.
The consequences of not amending pension scheme
Failing to amend a pension scheme in good time can have significant consequences. If a scheme does not meet the requirements of the Future Pensions Act by 1 January 2028, it may no longer be recognised for tax purposes as an authorised pension scheme. In that case, the Tax and Customs Administration may treat the full amount of accrued pension entitlements as taxable earnings. This would mean that employees would immediately become liable for income tax on their accrued pension entitlements. In addition, revisionary interest may be due. The so-called reversal rule may also lapse, meaning that future pension contributions could no longer be accrued tax-free. These consequences could have a significant financial impact on both employers and employees.
Existing pension entitlements may also be affected
Furthermore, the transition to the new system affects more than just future pension accrual. In certain circumstances, accrued pension entitlements may also be affected. This is precisely why it is important to ascertain in good time whether the existing pension scheme is fit for the future and what actions are needed to mitigate tax and employment law risks.
Have your pension scheme assessed in good time
In our experience, many employers do not yet have a clear understanding of how the Dutch Pension Future Act will affect their businesses. We therefore recommend having your existing pension scheme assessed well in advance of 1 January 2028. Conducting a review in advance allows you to make any necessary adjustments carefully and prevent any unpleasant surprises for employers and employees alike.
NeD Tax would be happy to assist you in assessing your pension scheme and identifying any (tax-related) implications. Please complete our contact form, and we will get in touch with you as soon as possible.
