THE HAGUE, 07/12/06 - The Upper House has passed the new Pensions Act. From 1 January, stricter requirements will apply to pension funds.
To insure pension payments to participants, the bill sets requirements for the size of pension funds' capital. Participants must on average not see their pension fund's reserves dip below the required minimum more than once during their pension build-up period (around 40 years).
Under the new Pensions Act, the co-decision-making status of participants in pension schemes is enshrined in law. This means business sector pension funds will be required to set up a participants council. Company pension funds can choose between a participants council or representation of pensioners on the board.
Additionally, pension funds and insurers must give clear explanations to their participants and pensioners on their capital built up and indexation of their pensions to inflation. This information must be provided at least once a year. If participants give their permission, this can be via e-mail.
Employees no longer building up pensions in a fund (sleepers) must receive information once in five years on their built-up assets. Information on voluntary supplementary pension schemes must comply with the requirements for information on complex financial products, so that employees can compare the different schemes.
If pension funds do not fully index pensions or attach conditions to indexation, they must inform participants and pensioners clearly about this. If the indexation policy of a pension fund is unclear, the supervisory authorities will assume that pensions are unconditionally indexed. Additionally, there will from 2008 be an 'indexation label' to give participants a clearer picture of the indexation expected. How this will look will become clear next year.
The proposed bill also specifies that company pension schemes may not have entry ages of over 21 years, in order to combat discrimination against younger versus older employees and to reduce the number of people without supplementary pensions.
