After State Secretary Wiebes of Finance last week unfolded the Cabinet's ideas on pension (self-administered) for the director-major shareholder (dga) (see our article Solutions for self-administered pensions), his Social Affairs and Employment colleague Klijnsma did so for the pensions of “ordinary” employees in a letter to the House of Representatives on 6 July. It concerns the outline of a future-proof pension system. Final conclusions have not yet been drawn.
For now, the Cabinet's preference is to switch to a system where all employees in a pension scheme pay the same contribution. This is already the case today, but where now the same amount of pension is accrued annually at each age (the average system), the annual accrual of the pension entitlement under the government's plans decreases as the worker ages (degressive accrual). How the transition should take place will be worked out in more detail. The effects of this transition will be greatest for workers at around halfway through their working lives (around 45), but Klijnsma says that the burden of the transition will have to be balanced.
The Cabinet also favours more customisation and more choices so that pension schemes better match the characteristics and preferences of participants. To prevent this from becoming too complex and expensive, a number of standard options may be adopted. For instance, options to tailor pension contributions or benefits to personal needs, such as buying or repaying one's own home or for care-related needs.
Some form of compulsory membership of pension schemes will be maintained for employees. But at the same time, options will be examined to prevent employees from accruing more pension than they need given their financial situation.
On the other hand, non-employees who currently accrue too little pension will be supported to increase pension accrual. This concerns certain groups of flex workers.
Klijnsma announced that she will send the House a work programme in the autumn, outlining the steps the Cabinet will take in the coming period to achieve the future-proof pension system. The aim is to phase out the average system as of 2020.