Impending changes to pension value transfer system
The State Secretary for Social Affairs in a recent letter brought the Lower House of the Dutch Parliament up to date on the proposed overhaul of the pension value transfer system. The regime as it now stands was originally devised with a view to preventing job change-induced loss of accrued pension rights in a final salary scheme setting, as an objective which the switch from final salary to career average schemes has since rendered obsolete. The existing system moreover is a closed book to employees, with the top-up payment obligation in particular giving rise to complications. All of which has prompted the pension scheme administrators to conclude that the individual value transfer system is due for an overhaul.
The State Secretary considers the right to individual value transfer important for employees as this enables them to tailor their retirement provisions to their own specifications. The transfer of all pension claims to a single pension administrator could make the choice in favour of taking flexible retirement a more straightforward one and will in general lead to reduced administrative fees. If it were decided that the individual value transfer system should be preserved, value transfer ought to be effected on the basis of the financed value rather than the level of the pension claims whereas the complex computation rules used in reconciling the existing and new pension schemes ought to be abandoned.
The State Secretary moreover favours a more streamlined value transfer system boasting greater efficiency. An element could be the mandatory automatic transfer of small pension claims upon the request of the transferring pension administrator. This is a matter which needs to be probed in more detail, as is the opening out of the scope for collective value transfer.
The temporary restriction of the value transfer obligation where there are top-up payment charges will be upheld until such time as the new value transfer legislation has come into force, albeit that the scheme will be retroactively brought into line, with effect from 1 January 2014, to the change in the definition of “small-scale employer” as per the Social Insurance (Funding) Act Decree.