If you are an employer currently offering your Dutch employees participation in a pension arrangement, then the below is a “must read”. In the Netherlands a legislative proposal is pending which may have an impact on the pension arrangements within your company.
As of 1 January 2015 the following changes may come into force:
For all employees
- Yearly accrual percentages are decreased
- This means that the annual amount which your employees may save for their old age pensions is reduced
- Pension premiums will decrease
As premiums are generally paid by both employers and employees, it is up to you as employer to decide who is going to benefit from the premium decrease. Will you reduce the employee contributions or will you use the released salary costs for other purposes? Now is the time to plan and decide. Note that changes to pension arrangements administered by an insurer could require prior works council consent.
For employees with a yearly salary over EUR 100,000 gross
- Pension can no longer be accrued for salary over EUR 100,000 gross
- This means that your key employees will face a pension deficit
- A supplementary savings scheme will be introduced
- Payments to this savings scheme are to be made out of net salary
Contributions to a Dutch pension scheme are currently only taxed at payment on retirement. This tax friendly treatment will now be limited.
Pension can no longer be tax friendly accrued for salary over EUR 100,000 gross. Senior and key positions in your company will be affected by this change. Depending on the nature of your pension commitment you might be required to compensate such employees for this pension deterioration. Even if this is not the case, you might want to consider doing this on a voluntary basis, as these employees will probably be the core of your human capital.
The following questions are worth considering: Will you offer participation in a company supplementary savings scheme? Or will you otherwise increase gross salary so that employees can arrange for that themselves? How will this affect your budget? These are questions to review and answer at short notice, as key employees are always the first to raise questions of this nature.