The Future Pensions Act (Wtp) does not have to end with a flat contribution rate

The Dutch Future Pensions Act, or Wet toekomst pensioenen (Wtp), means that many employers need to review the way their pension scheme is structured.

Much of the attention understandably goes to the mandatory changes: the new contribution structure, potential compensation, the transition plan and communication with employees.

But the Wtp transition also creates an opportunity to ask a different question:

What do you want your pension scheme to look like after the transition?

A Wtp-compliant collective pension scheme can provide a strong foundation, while giving employees greater flexibility on top of it. For example, through an additional flexible budget with Vive.

This allows employers to combine the best of both worlds: a solid collective foundation with personal flexibility on top.

Start with the foundation: a Wtp-compliant pension scheme

Under the new Dutch pension system, the starting point is a flat, age-independent contribution rate: in principle, the same contribution percentage applies regardless of an employee’s age. Existing schemes may, under certain conditions, make use of transitional arrangements.

This means employers need to make decisions about areas such as their contribution rate, any required compensation and the structure of their future pension scheme.

By 1 January 2028, collective employer pension schemes must comply with the Wtp rules. The transition itself therefore needs to start much earlier.

Vive’s Wtp calendar begins with establishing exactly where your organisation currently stands. You then choose your preferred route and design the new contribution structure. Compensation, employee consent, implementation, payroll and employee communication follow afterwards.

And it is precisely during those initial decisions that there is room to look beyond the collective pension scheme alone.

The collective pension scheme as the foundation, Vive as the flexible layer

A flat contribution allows you to create one clear pension foundation for your employees.

But giving everyone the same contribution percentage does not mean that every employee has the same financial needs.

One employee may want to maximise their retirement savings. Another may prefer to build up assets that are available before retirement. Someone else may want to contribute more themselves, particularly if their employer matches that contribution.

This is where an additional flexible layer can complement the collective pension scheme.

One possible structure, based on Vive’s propositions, could be:

10% flat contribution into the collective pension scheme + 5% flexible choice budget.

The collective scheme provides the same foundation for everyone. Depending on how the arrangement is designed, the additional budget can then be used to increase the collective pension contribution or be allocated through Vive to the third or fourth pension pillar. This gives employees the option to build up more for retirement or to invest towards goals for which their assets remain more freely accessible.

In this type of structure, Vive does not replace the collective pension scheme.

Vive sits alongside it, or on top of it.

Not one additional scheme, but several possible structures

The flexible layer does not have to look the same for every employer.

Your available budget, existing pension arrangement and the benefits you want to offer employees will determine which structure makes the most sense.

Some of the possibilities include:

1. A flexible choice budget on top of the flat contribution.
   In addition to the collective pension foundation, each employee receives an additional budget. This could, for example, be used for further retirement saving or for building more freely accessible personal assets. In one of Vive’s proposition examples, employees receive a 10% collective contribution with an additional 5% flexible budget.
2. A matching arrangement.
   Employees decide whether they want to make an additional contribution themselves, with the employer matching that contribution within the agreed arrangement. This encourages employees to actively engage with their financial future without requiring the employer to automatically provide the same additional contribution to everyone.
3. A fixed amount per employee.
   Instead of linking the additional benefit to salary as a percentage, employers can choose to provide a fixed amount per employee. This gives the employer predictability over the cost of the benefit while still creating room for employees to use it in a way that fits their personal situation.
4. An excess pension arrangement for higher earners.
   In some pension schemes, collective pension accrual stops above a certain pensionable salary or excess threshold. Employers can create additional choice for income above that threshold. In one of Vive’s examples, employees can allocate the contribution above the threshold either to an additional second-pillar pension arrangement through a PPI or to the third or fourth pillar through Vive.
5. A gradual transition towards a more individual structure.
   Employers can also distinguish between existing and new employees. In one example from Vive’s proposition, existing employees retain their collective foundation with an additional flexible budget, while a different structure applies to new employees. This allows the overall employment benefit to evolve gradually.
6. Converting additional annual leave into personal assets.
   Flexibility does not necessarily have to come directly from the pension contribution. Employees could, for example, voluntarily convert unused non-statutory annual leave into personal assets. Within the Vive proposition, this can be directed towards the third pillar for retirement or the fourth pillar for more freely accessible investments.

The exact tax and employment-law structure will depend on the individual situation. For example, tax relief on third-pillar pension contributions depends on an employee’s available annual and unused pension allowance.

Why consider this during the Wtp transition?

It may be tempting to complete the Wtp transition first and only think about additional benefits afterwards.

But doing so means missing a natural opportunity.

During phase 1 of the transition, you establish where your organisation currently stands and determine which route you want to take. During phase 2, you determine the flat contribution rate, calculate the financial impact across different employee groups and consider compensation and transitional arrangements.

That is precisely the right moment to decide whether your entire employer pension budget should go into the collective scheme or whether part of it could be used more flexibly.

The transition plan and employee consent process then follow, after which the provider, contracts, payroll administration and implementation need to be arranged.

Put simply:

Design the complete employee benefit first. Then determine how the individual elements should be structured.

And do not forget your employees

A new pension scheme is not simply a financial or legal project.

It changes one of the most important employment benefits your employees receive.

That means a significant part of the Wtp transition ultimately sits with HR: communication, employee consent, different employee groups and the questions that the changes will inevitably raise.

Vive’s Wtp calendar therefore dedicates the final stage of the transition specifically to communication and employee guidance. Employers need to explain what is changing, what those changes mean personally and help employees understand the choices they need to make.

A flexible arrangement only works when employees understand what their options are, why those options exist and what the consequences of their choices may be.

That is perhaps the biggest difference between simply becoming Wtp-compliant and designing a pension benefit that genuinely fits your workforce.

Your Wtp pension scheme does not have to stop at the flat contribution

The Wtp determines what your collective pension scheme needs to comply with.

But there is more flexibility available within your broader employee benefits package.

You can create a clear, collective Wtp-compliant foundation and add room for individual choice on top of it. That could be through a flexible budget, employer matching, a fixed contribution, an excess pension solution or a combination of these options.

Flexibility therefore does not have to come at the expense of a strong collective foundation.

The flat-rate contribution is the foundation. Vive is the flexible layer on top.

Where does your pension scheme currently stand?

The first step is understanding what needs to change within your organisation.

Vive’s Wtp check helps you understand your current situation, the deadlines that apply and which steps you need to take next. The Wtp calendar then guides you from the initial assessment and decision-making process through implementation and towards the final transition deadline of 1 January 2028.

Would you also like to understand how a flexible layer could complement your future pension scheme? Speak to one of our pension experts and explore the options for your organisation.