On Friday 21 April 2023, the Dutch Supreme Court clarified that in certain cases, employers can amend an unconditionally agreed indexation on pension entitlements. Although the Dutch Pension Act prohibits changing pension entitlements once they have accrued, according to the Supreme Court this ban does not extend to all types of unconditionally agreed indexation.
The case was brought before the court by employees of the Stichting Autoriteit Financiële Markten (Dutch Authority for the Financial Markets, AFM). The AFM adjusted the pension scheme for its employees as per 1 January 2016. One of those adjustments was the change from unconditional indexation to conditional indexation witch respect to benefits accrued before 2016.
The employees took the position that this amendment should fall under the ban on changing pension entitlements once accrued. This prohibition is included in the Dutch Pensions Act based on the principle that any assets deposited for pensions should remain intact. Until now, it was unclear whether an unconditional allocation of pension rights would always fall under this ban.
The Supreme Court followed the views of the AFM and ruled that this is not the case. If unconditional indexation occurs only as long as the employee is a participant in the pension scheme, it does not fall under the prohibition, as there is no advance funding in this type of indexation scheme. It therefore can be changed in the future without affecting already separated pension assets.
The Supreme Court has referred the case for further consideration, annulling the contrary decisions of the Amsterdam Court of Appeal.
NautaDutilh's pension law and supreme court teams assisted AFM in this matter. They are happy to assist you if you have any questions about this judgment or about the possibilities and impossibilities of changing pension schemes within your organisation.