The Dutch Federation of Pension Funds (Pensioenfederartie) has advised the Dutch Minister of Social Affairs and Employment, Eddy van Hijum, against implementing the proposed New Social Contract (NSC)/Farmer-Citizen Movement (BBB) amendment to the Future Pensions Act (Wtp).

In a 26-page letter, Pensioenfederartie chair, Ger Jaarsma, said he was responding to the minister’s request to outline the federation’s assessment of the amendment led by NSC MP, Agnes Joseph.

NSC and BBB have proposed introducing a mandatory referendum for schemes, which would mean schemes could only transfer to the new system if there is enough support from members.

In his letter, Jaarsma said: “We advise you not to support the amendment for the following reasons. Splitting the system into an old and a new part will result in lower and less secure pensions for participants.

“The proposal for a collective right of consent or individual right of objection is at odds with the principles of the Wtp, and the agreements in the Pension Agreement. The proposal is evidence of mismanagement, will delay the transition by at least two to three years, has major implications for the structural implementation of the pension schemes and communication with participants, and will incur high costs.”

In a separate statement on the federation’s website, Jaarsma said the proposed amendment was “legally incomplete and uncalculated”. He warned that, if adopted, it will lead to “unacceptable uncertainty and financial disadvantages” for millions of Dutch citizens.

“Their benefits will be lost if they do not save, the Pension Federation stresses. For instance, returns on investments will fall, costs will rise and the possibility of adequate compensation for the abolition of the average system will disappear. All this could lead to worse pension outcomes,” he said.

In addition, he said that if the amendment is adopted, pension funds will have to revise their plans and an old and new system will have to run side by side.

“All this causes significant delays, higher costs and unnecessary complexity. In addition, delay will lead to billions in additional costs, setbacks and risks for the national budget.”

Jaarsma further warned that a delay could mean the Netherlands fails to meet its obligations towards the EU.

“Employers and government bear considerable financial burdens, and pension providers may take legal action to claim compensation. All these financial implications are seriously underestimated by the petitioners,” he said.

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