IMPACT OF THE NEW PENSIONS ACT IN THE NETHERLANDS: THE EMPLOYERS’ PERSPECTIVE

During recent times, there has been a decline in the number of Defined Benefit schemes in the Netherlands because of the ever-increasing liabilities of these schemes. This is explained by financial factors such as low interest rates, and demographic factors such as the increase in life expectancy. These factors together with changes in the Dutch labour market in this contemporary age made the Dutch government to seek a pension system that will better accommodate the new status quo. After series of discussions over the years, the Dutch Senate on May 30, 2023, approved the Future of Pensions Act (in Dutch; Wet Toekomst Pensioenen (Wtp)) with the sole purpose of ensuring that Dutch pension system is more future-proof for both employers and employees. Since this work was done in the context of a curriculum internship at Mercer, specifically in the Dutch team, this became an interesting topic for me to investigate. While carrying out actuarial valuations for various clients, it was noticeable that the number of active members declined in comparison to previous valuations; for some clients there were no more active members, just deferred and retired members while for others there was a closure of their Defined Benefit plans. Another important fact is that a significant number of retired members lived longer than the expected age set by the company, thus making sponsors to have increased liabilities as they must keep paying the retirement benefits. One of Mercer’s clients’ data was used as a case study, and it has shown that there is a reasonable need for a change to a Defined Contribution scheme. The new type of scheme was then proposed, and it is discussed in the Wtp framework. This internship report will provide a better understanding of the pension schemes in the Netherlands, and it will reveal the benefits of the proposed Defined Contribution scheme. The proposed pension scheme was analysed in comparison to the Defined Benefit scheme, and it proved to be a more adequate option for the present times, particularly from the point of view of employers.