Defined Benefit (based on final pay or average pay)

Defined Capital

Defined Contribution

NB: Pension legislation was amended significantly from 1 July 2023. As a result of this, all pension plans now have to be converted into DC plans based on a flat rate premium, with few exceptions. In addition, the “partner pension” also needs to be amended to comply with new legislation by 1 January 2028.

A transition period applies up to and including 31 December 2027. This means that pension plans need to be amended in line with new legislation by 1 January 2028 (unless an exception applies). New pension plans which have been set up from 1 July 2023 or later need to comply with the new legislation directly.

The Dutch tax framework will facilitate a maximum pension contribution of 30% for the flat rate defined contribution. In the event social partners also agree upon compensation payments for future service, the maximum tax facilitated pension contribution will temporarily amount to 33% (until 2037).

Compensation can be offered to employees in various forms. If compensation is offered in the form of a pension, new-hire employees are also entitled to compensation in the same form.

If a DB plan is operated by a pension fund, social partners may agree to either keep benefits for the past service as defined benefits or to convert the past service benefits into DC.

Whether any consultation obligations apply for the employer depends on whether the employer is bound by a collective bargaining agreement and/or mandatory industry wide pension fund.

Depending on the type of transaction and the circumstances of the transaction, in principle, all rights and liabilities in relation to pensions will transfer to the buyer from the transaction date. This may include a substantial (retroactive) risk exposure, which can impact the deal timing and the purchase price. In particular, it is important to identify early on (i) whether any (un)conditional indexation rights might apply and (ii) whether a compulsory industry-wide pension fund may apply to an in-scope entity and, if so, whether this entity is affiliated and has registered its current and former employees correctly with this fund. Any breach in this respect may lead to significant retroactive claims.

In addition, it is important to assess the steps that have been taken to amend the pension plan of the target company in line with new pensions legislation, as well as considering the potential impact of the proposed transaction in this respect.