Earlier in 2020, draft regulations on 'own pension accounts' were released for consultation. The consultation deadline was 3 August 2020 and the new rules will enter into force at the beginning of 2021. The changes aim to make it easier for employees to receive the best possible pension. Employees will be able to choose who will manage their pension capital, which will lead to greater competition in the market.

Ease of collection: all-in-one account

The new rules mean that employees who are members of defined contribution pension schemes can collect their pension capital in one account. This applies to both contributions from their current employer and earned pension capital from previous employment (capital certificate). If employees raise no objections to the transfer, the collection of the pension funds will be carried out. Among other things, the changes will mean that employees need not cover the management and administration costs for pension capital earned in previous employment relationships. Employees will also be able to choose their own pension provider to manage earned pension capital and future contributions.

Ease of access: electronic communication

A rule will also be introduced stating that electronic communication will be the preferred form of communication in matters relating to pension schemes. This applies to employees, employers and pension providers. The rule will ensure that parties can communicate in the simplest way possible in matters relating to pensions. Employees can object to electronic communication as the preferred form of communication.

Impact on employers

The new rules mean that employers will have a duty to inform employees about the collection of pension funds in their own pension accounts. This involves informing employees about:

  • which specific pension capital certificates will be transferred;
  • the size of the funds;
  • the institution in which the pension capital certificates are managed; and
  • the effect of previously earned pension capital being transferred to the employer's pension scheme.

Employers must also inform employees about their right to enter into an agreement with a self-selected institution. Employers' pension providers will be responsible for providing employers with the necessary information, so that they can fulfil their information obligation to employees.

The duty to provide information will give employees the opportunity to decide whether it will be worthwhile to transfer their pension capital certificates to their employer's pension scheme, another pension scheme or whether they should keep their pension capital certificates where they are currently managed.

In addition, employees will receive a saved-up pension, even if the employment relationship ends before 12 months have passed. This can lead to increased pension costs for employers. Until the rule change, pension capital set aside for employees who left within 12 months after an employment relationship was established was returned to the pension scheme's defined contribution fund. This rule change will take effect from 1 January 2021.