Pension law developments in 2024

Aside from the introduction of the Future of Pensions Act (Wet toekomst pensioenen), other pension law developments also call for our attention. This news update will discuss two ECJ judgments on cross-border transfers of accrued benefits, the new Dutch Pension Fund Code (Code Pensioenfondsen) and the reduced age for pension scheme admission

New Dutch Pension Fund Code

The amendment to the Dutch Pension Fund Code (in Dutch) entered into force on 1 January 2024. The previous version of the Code, the Code of the Dutch Pension Funds, dated from 2018. As the Dutch Pension Fund Code is legally enshrined,  it entails obligation and serves a major regulatory function.

The amendment involves the following topics:

• 'sustainability and investment policy' (standard 2);
• 'vision, mission and strategy' (standard 1); and 
• 'diversity and inclusion' (standard 34 and other standards). 
  
   

The Future of Pensions Act also brought changes, including in the areas of 'choice guidance' (standard 5) and 'increased stakeholder centricity' (standard 32 and other standards).

After consultations with the Association of Internal Supervisors for the Pensions Sector (Vereniging Intern Toezichthouders Pensioensector, or VITP), the principles and standards from the VITP supervision code have been integrated into the Dutch Pension Fund Code as much as possible. For that reason, the VITP decided to revoke its own VITP supervision code (in Dutch) when the Dutch Federation of Pension Funds (Pensioenfederatie) introduced the amended Dutch Pension Fund Code. As a result, the principles of sound and responsible internal supervision are now legally enshrined.

Pension scheme admission age lowered to 18

With effect from 1 January 2024, the age at which people can join a pension scheme has been lowered from 21 to 18. This change is part of the Future of Pensions Act, but in contrast to the final implementation date of 1 January 2028 for the other elements of this Act, this change has already entered into force. The pension agreements and pension scheme rules must be amended on this point. 

For employees aged 18 or 19, the Ministry of Finance and the Tax and Customs Administration are allowing existing graduated defined contribution schemes to use the contribution percentage applicable for the preceding age group of 20-24. This means that the maximum pension contribution for employees aged 18 or 19 is higher than appropriate for this age category. Incidentally, it remains to be seen whether this will not lead to age discrimination. In addition, pension schemes must be amended on this point right away, which requires consent from the works council and employees. The question is how to implement this as efficiently as possible together with the other changes under the Future of Pensions Act, which will apply later.

Fewer restrictions for cross-border transfers of accrued benefits

On 16 November 2023, the EU Court of Justice (ECJ) rendered two judgments rebuking the Netherlands for its overly obstructive legislation (specifically the Pensions Act and the Wages and Salaries Tax Act (Wet op de loonbelasting)) on international transfers of benefits accrued in the Netherlands. 
In contrast to pension capital transfers from one pension provider to another within domestic borders, the Netherlands has put various impediments in place for transferring accrued benefits from a Netherlands-based pension provider to a pension provider located in a different Member State. These impediments effectively make it impossible to transfer accrued benefits abroad. 

The main impediments are the two tax requirements that the Netherlands has imposed:

1. The pension scheme of the new, foreign employer must not have a wider commutation option than that permitted in the Netherlands. 
2. The new employer's foreign pension provider must conclude an agreement with the Dutch Tax and Customs Administration in which that pension provider accepts liability for the tax owed in the Netherlands for commutation of the pension. 

Such requirements do not apply to transfers of accrued benefits within the Netherlands. The ECJ found that no grounds could be identified to justify this difference between domestic transfers and a cross-border situation.

Consequently, by relying on this case law, employees accepting a position in a different Member State can now more easily transfer their pension capital accrued in the Netherlands. 
This could be relevant, for example, for persons temporarily employed in the Netherlands who – whether mandatorily or not – accrue pension with a Dutch pension provider. When this employee returns to their country of origin or takes up a position in any other country, they can more easily 'take' their pension accrued in the Netherlands – which is usually quite small – with them to their original pension provider or to a different pension provider.