Dutch parliament enables small pension pot transfers
The Dutch parliament has passed legislation enabling pension funds to transfer small savings pots to a new provider after a member changes jobs, allowing them to accrue benefits at a new scheme.
Previously, pension funds had to repay the member’s contributions if their pension rights amounted to less than €468 a year, in order to avoid proportionally high administration costs.
However, workers who have been refunded in this manner are facing lower benefits at retirement.
As of 1 January 2018, pension funds can automatically transfer small pension entitlements to the assets that are being accrued at a new pension fund.
The new option doesn’t apply to pension rights of less than €2, which will be added to a scheme’s collective assets.
Wouter Koolmees, the new minister for social affairs, estimated the number of these very small pensions at more than 200,000.
However, parliament decided that the option to refund small pensions would remain in case a pension fund had tried five times in vain to transfer rights to a new provider.
At the request of parliament, Koolmees indicated he would try to find out whether it would also be possible to transfer small pension entitlements to a participant’s previous provider.