NSC plan for pension fund referendums puts strain on coalition

Pieter Omtzigt’s NSC party is calling for members of pension funds to be given a vote on whether to be included in the new Dutch system.

NSC MP Agnes Joseph is expected to submit plans that would require pension fund managers to hold a referendum first before transferring to the new system. Pension providers have been able to opt in since January 1 this year.

Joseph says putting the issue to a vote would reduce the risk of legal challenges to from fund members who are unhappy with the new mechanism.

“I think the risks are extremely high and therefore people should decide for themselves if they want to do this or not,” she said.

She is expected to include the referendum in a package of measures to be put forward by NSC during a debate on pensions next week. MPs will vote on a bill originally put forward by former pensions minister Carola Schouten to delay the start of the transition period from January 2027 to January 2028.

The plan sets NSC at odds with coalition partner VVD, which steered through the reforms during Mark Rutte’s last cabinet. The other parties in the right-wing coalition, Geert Wilders’s PVV and the farmers’ party BBB, are also critical.

Sticking point

The coalition talks almost collapsed in the last minute because of a dispute between the parties on whether to push through with the pension reforms.

In the end they agreed to leave pension policy out of the coalition agreement and make it the subject of a free vote, on condition that none of the parties brought forward any major reforms before the start of 2025.

“Pieter Omtzigt did not vote for the new pensions act, so we would rather not have had it, but now that the law has been passed we are proposing improvements so that it works as well as possible for everyone,” Joseph said.

The reforms created individually tailored pension “pots” rather than giving employees a share of a large collective fund, while pension funds’ returns will more closely reflect market performance.

Supporters say the changes are better suited to modern working practices, in which people are more likely to change jobs and careers several times rather than staying with the same employer for life.

Critics say they will make pensions more unstable and increase the risk of shortfalls.

The system has also been criticised for putting people in the middle of their careers at a disadvantage because of the way contributions are weighted.

Under the old system all payments made during a worker’s career counted equally towards their final pension, whereas under the new system payments are treated as investments that grow over time, so contributions made in the early years are worth more.

People who switch from one system to the other in mid-career risk losing out because the payments they made earlier in their careers have not grown by as much as they would have done under the new rules.