Is a pension scheme mandatory?

Is a pension scheme mandatory?

Yes and no! The main rule is that an employer is not obliged to offer a pension scheme to employees. In addition, in principle, employees are not obliged to participate in a pension scheme provided by the employer.

In practice, however, there are many situations where this main rule does not apply, leaving an employer with little choice as to whether or not to offer a pension scheme. Also, an employer cannot always design or change the pension scheme as he sees fit. It is important to have certainty about this.

In what situations is a pension scheme mandatory?

  • For compulsory membership in an industry pension fund;
  • The obligation under a collective agreement; Restriction due to the works council’s right of consent;
  • In the case of a pre-existing implementation agreement;
  • Following a statutory provision in the Pensions Act.

Compulsory participation in industry pension fund

When a company falls under the scope of a compulsory industry pension fund, the consequence is that an employer is obliged to offer the pension scheme of the pension fund and register the employee with this fund. If an employer mistakenly does not join a compulsory industry pension fund, this can have substantial financial consequences for him and his employees. Also, the employer must join later anyway and retroactively register the employees. This means that all overdue pension contributions still have to be paid. Sometimes exemption is possible, but as this varies by industry, it is essential to research this carefully. You can check whether your enterprise is covered by one of the mandatory defined benefit funds at

Most Dutch workers are compulsorily affiliated with one of more than 50 industry pension funds. The best-known industry pension funds are ABP (for government and education), PFZW (health and welfare), BPF Bouw, and the Metal and Technology Pension Fund.

Pension obligations based on a collective agreement

A collective agreement may contain provisions and conditions that the pension scheme must comply with or may mandatorily prescribe with which pension provider the pension must be placed. CBA provisions on pensions cannot be declared generally binding. This means that, in principle, unaligned employers and employees are not bound by them. However, it is always important to investigate whether the employer and employees may fall within the scope of a compulsory industry pension fund.

Restrictions on the employer due to the right of the consent of the works council 

The so-called right of the consent of the works council further limits the employer’s contractual freedom on pensions. This consent right is regulated in Section 27 of the Works Councils Act. A works council is required by law if the company employs at least 50 people. When determining the number of people employed in the enterprise, no distinction may be made between working full-time and those working part-time. Under the Works Councils Act, the employer must obtain the works council’s consent for any decision to introduce, amend or revoke a pension agreement, among other things.

The employer has already entered into an administration agreement with a pension provider.

In this situation, the employer is almost always contractually obliged to register all new employees with the pension provider. One reason for this is that, in principle, a pension administrator is not allowed to ask about the health status of employees. Now, to avoid registering only employees with poorer health, the pension administrator requires all employees – or a group of employees – to be registered.

Restriction due to statutory provision Pension Act

An employer must inform a new employee in writing within one month after they join whether or not they will participate in a pension scheme. If this employee belongs to the same group of employees already participating in a pension scheme, the new employee will automatically also start participating in this pension scheme. In practice, this is usually already mentioned in the offered employment contract.

Employees’ contribution

Does a compulsory pension scheme cover the employer? If so, that scheme or the collective agreement will state employees’ maximum contribution. Note! Pension contributions are deductibleThe employer’s share in employee pension contributions counts as labor costs. The employer may deduct these from the profit. As a result, you pay less tax.

Employer’s duty of care

Information about the pension goes through the pension provider (the pension fund or a pension insurer). But the employer must also inform employees about some things. This is called duty of care. The pension fund or pension insurer can often help with this. The employer must notify employees about their pension:

  • At the start of employment. The employer tells them about the pension scheme and the pension contribution they have to pay themselves. And whether value transfer is possible. A new employee puts an already accrued pension into the new employer’s pension scheme.
  • If they are already working, for example, about opportunities to build an extra pension.
  • If they leave employment, the employer tells the employer that the pension scheme may continue if the employee starts their own business. In addition, the employer should inform the employee about the value transfer of their pension to their new employer’s pension scheme.

Can an employee refuse a pension?

In most cases, it is almost impossible not to participate in a pension scheme. If an industry pension or pension participation is stipulated in the collective agreement, the employee cannot get out of it. If the employer has entered into a contract with a pension insurer, there is also usually an agreement that all employees will participate. As an employee, you can also ask yourself whether it is wise not to participate. Besides your compulsory contribution to the pension fund, the employer also contributes a portion. Also, pension contribution comes from gross salary, whereas it should come from your net salary when you start saving yourself.


A conscientious objector is a person who does not wish to take out insurance because of their religious beliefs. This affects the pension. They must then have an official dispensation from the Social Insurance Bank (SVB). Applying for such an exemption is quite drastic, as the exemption applies to all insurance. You will also be deregistered for AOW and WW, and you can no longer get health insurance. So do not register as a conscientious objector just to get out of your compulsory pension contribution. If you receive recognition from SVB, you are not necessarily cheaper. Instead of the insured variant, the conscientious objector pays a premium for a savings variant. The premium is paid over a specially opened savings account with an interest rate. They receive this in installments by retirement age until the pot is empty.

The employer may not change the pension scheme overnight.

The pension scheme is a condition of employment, and the employer is not allowed to change it just like that. This is only permitted with the consent of the employees. Sometimes the pension scheme or collective agreement states that unilateral adjustment is possible. But this is only allowed in severe circumstances, such as if the company is in danger of going bankrupt or because legislation or the collective labor agreement is changing. The employer must then inform its employees of a change proposal.

If a scheme is applicable within the company, it is compulsory in almost all cases. If a voluntary pension is offered, the key is ensuring everyone participates. Do you have any questions after reading our blog? Feel free to contact us; our lawyers will happily talk to you and give you appropriate advice. 

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