By: HUB’s EB Global Benefits Team

What is it about?

The Netherlands is soon entering the third year of a comprehensive reform of its pension system under the Future of Pensions Act (WTP). The reform transitions the system from traditional defined benefit-style arrangements to defined contribution-based pension schemes, where benefits depend more directly on contributions and investment performance.

Under the new framework, pension accrual will shift toward individual pension capital, supported by a flat-rate contribution structure rather than age-dependent contributions. The reform also changes survivor benefits and retirement income structures, requiring pension plans to be redesigned to comply with the new legal requirements.

All pension schemes in the Netherlands must transition to the new framework no later than Jan. 1, 2028. Employers participating in industry-wide pension funds will generally transition according to sector agreements negotiated by social partners, while organizations using insured pension arrangements, Premium Pension Institutions (PPIs) or company pension funds may need to actively redesign their pension plans.

The transition involves strategic decisions regarding contribution levels, benefit design, compensation arrangements for affected employees and employee communications. Because these changes affect employment conditions, implementation often requires consultation with works councils and, in some cases, individual employee consent.

What is new?

Recent communications from pension advisers and providers emphasize growing urgency for employers to carry out the transition process, highlighting operational deadlines and potential legal risks if implementation is delayed.

Although the legal transition deadline is Jan. 1, 2028, insurers and PPIs have indicated that new pension scheme implementations may no longer be accepted after October 2027 due to administrative capacity limits. Employers that postpone preparations risk not being able to finalize a compliant pension scheme before the statutory deadline.

Failure to transition a pension scheme on time could result in the plan being classified as “non-qualified,” meaning it no longer qualifies as a recognized pension arrangement under Dutch tax law. This could lead to significant financial consequences, including additional tax liabilities on accrued pension rights.

In addition, delays could create coverage gaps for death or disability benefits, particularly where existing pension contracts expire before a compliant scheme is implemented. In such cases, the employer may remain responsible for promised employment benefits even if the insurance coverage has lapsed, potentially exposing the company to substantial financial claims from employees or surviving dependents.

Given the complexity of pension redesign, consultation processes and administrative implementation, experts estimate that the full transition process can take 6 to 18 months, depending on the structure of the current pension plan.

Impact on companies

  • Employers may face operational constraints if they delay transitioning to the new pension framework, as providers may limit implementations close to the deadline.
  • Failure to transition on time could cause pension plans to lose their favorable tax status, potentially creating unexpected tax liabilities for employees.
  • Delays may lead to gaps in death or disability coverage if existing pension contracts expire before a compliant scheme is implemented, potentially leaving employers financially responsible for promised benefits.

Suggested employer action

  • Engage your pension consultant to assess how the current pension plan will need to change to comply with the new legal framework.
  • Engage with pension consultants, pension providers, insurers or PPIs to confirm transition timelines and administrative capacity.
  • Evaluate potential compensation measures for employees affected by changes to contribution structures.
  • Prepare for Works Council consultations and employee communication strategies.

If you have any questions, please contact your HUB advisor. You can view more bulletins on Netherlands pension updates on our Global Benefits Directory.