Election results call for increased vigilance from the pension industry
Just as the new pension contract has passed both the House of Representatives and the Senate and the law is set to take effect on July 1, 2023, a possible new administration threatens to throw a spanner in the works. This is a setback for the pension world and possibly also for the pension participant, as it increases uncertainty about the future of the pension system.
Right of consent or rollback?
One of the most striking proposals comes from Pieter Omzigt's NSC, which advocates a right of consent for pension participants. This would create a kind of referendum where participants can vote on whether or not to roll back existing pension entitlements into the new system. If most pension participants in a pension scheme vote against saving in their pension entitlements, this would directly affect a pension fund's transformation mission and future implementation. Some parties, such as PVV and BBB, advocate reversing the recent pension reforms. Should an actual proposal for this be made, it will have a significant operational impact on the pension sector and the participants' schemes. After all, the industry is preparing for the most critical transition in the past 40 years.
Should the proposal for the right of consent go through, it would result in pension funds having to have two schemes run side by side, with a legal separation. This is operationally possible but cost-increasing, while the ambition is to make the pension system cheaper.
The introduction of consent rights for choosing whether to opt in is a positive development from a control perspective. On the other hand, it is also a difficult choice for pension members. For many pension members, it is entirely unclear what exactly "raking in" means " and the advantages and disadvantages. It is important that the pension sector realises this and prepares in good time for possibly informing participants when making a choice, should the right of consent materialise. It isn't very easy for pension participants to make an informed choice without appropriate information provision.
The coming period is crucial.
Pension reforms are more than just a change in legislation. They are shifts that profoundly affect the structure of the pension system and the way individuals are involved in deciding their financial future. The pension industry is entering an uncertain time, and it is wise to focus on agility and steerability to cope well with any changes in laws and regulations.