15 September 2025
The transition to the new pension system is in full swing. The social partners involved in the pension funds have largely completed their transition plans. These plans always include a section on compensation for current participants, employees, who are disproportionately disadvantaged by the change in the pension system.
The abolition of the so-called average contribution system in pension funds is expected to particularly affect employees aged between 40 and 55. The disadvantage for this group can be compensated in the form of additional pension entitlements or salary. According to the transition plans, compensation generally takes the form of additional pension entitlements. However, this does not relieve employers of their responsibility to provide clear information to employees. At the same time, potential pension compensation is also a factor to take into account in dismissal cases.
The starting point under the Future of Pensions Act (Wtp) is that active participants in a pension scheme, in other words employees, must be “adequately” compensated if they suffer a disadvantage due to lower pension accrual, and that this should be arranged as “cost-neutral” as possible from the employer’s perspective. The social partners determine per sector or pension fund whether and to what extent a disadvantage must be compensated and how this should be done for each age category of affected participants.
This can mean that at the moment of transition to the new system, let us say 1 January 2026, active participants receive a one-off compensation by adding a sum to their individual pension capital. Another option is to spread the compensation for the affected participants over several years. This may involve tens of thousands of euros per participant.
What happens if a 50-year-old employee leaves employment just before the transition date and is therefore no longer a participant in the pension fund on that date, even though the fund was about to grant him compensation? It is possible that he may also be eligible for compensation with his new employer, but it is equally possible that he will not (for example if the new employer has an insured pension scheme). Such an employee could easily miss out on tens of thousands of euros in pension compensation or accrual. Should the (former) employer have warned him of this risk at the end of the employment contract, so close to the transition date?
The primary responsibility for communication about the change to the pension scheme under the Wtp, and therefore about compensation, lies with the pension fund. However, it is advisable for employers to alert employees facing dismissal to the possible consequences for their pension position and to recommend that they seek legal advice.
When an employment contract ends by settlement agreement, it often includes a clause such as: “The Employer will settle the pension scheme in accordance with law and regulations.” It is important for both parties to clearly understand what this means. How does this affect pension compensation (in the form of salary or pension)? From the employee’s perspective, the key question is what the impact will be if the dismissal date falls just before or after the pension fund’s transition date, potentially resulting in the loss of compensation.
For completeness, pension compensation can play a role not only in (forced) job changes around a transition date but also in cases of transfer of undertaking. The statutory rule (Article 7:662 Dutch Civil Code) is that all rights and obligations of existing employees transfer to the acquiring company. However, compensation within the pension scheme falls under the statutory exception of Article 7:664 Dutch Civil Code, which means that the right to this form of compensation does not automatically transfer to the new employer. This is an important factor for both the acquiring and selling companies to consider during due diligence and business transfers.
In short, whether voluntary or forced, changing jobs can affect pension compensation. In some cases, employees may be entitled to compensation from both their old and new employer, but the timing of dismissal or job change can also mean that pension compensation is missed altogether. While the primary responsibility lies with pension funds to inform participants, employees’ legal advisors and employers also have a role to play due to their duty of care and information obligations.
Do you have questions about pension compensation, dismissal or other employment law issues? Please feel free to contact us for legal advice.
