New legislation to reform the Dutch pension system will not come into effect until January 1, 2023, over a year later than expected, social affairs minister Wouter Koolmees has told MPs in a briefing.

This also means pension funds will have an extra year to adapt to the new system, and must have made the switch by 2027, Koolmees said.

Under the new system, pension funds will no longer ‘make promises’ about the size of the pensions they will deliver. Instead, pensions will vary in line with investment returns and life expectancy, meaning the economy will have more of an influence on payouts.

The delay in passing the new legislation is due to the complexity of the issue, Koolmees said. In the coming months, the plans will be discussed with financial service regulatory bodies and various other government advisory groups, he said.

The negotiations on reforming the Dutch system, described as ‘necessary reforms’ by Koolmees, started some 11 years ago. The Dutch pension system is currently based on three pillars – the state pension AOW, compulsory corporate pension schemes – either sector-wide or company based – and individual or private pension schemes.

In the new system, the state pension age will rise less quickly than originally planned, and there will be an early retirement option, aimed at people doing hard physical work.

Secondly, the reforms aim to spread the burden of paying for pensions more fairly across the generations. Corporate pensions will no longer be on based average (wage related) contributions but on everyone paying the same.