The new Dutch pension system will require schemes to migrate over €1.7 trillion of hard-earned retirement money due to the revolutionary changes to the second best pension system in the world (accord
The new Dutch pension system will require schemes to migrate over €1.7 trillion of hard-earned retirement money due to the revolutionary changes to the second best pension system in the world (according to recent research by Mercer). It is a massive task fraught with potential pitfalls. But organisations can achieve it successfully if they set a clear, robust strategy and learn from the lessons of previous migrations.
By Wouter Pijl, Head of Digital and Performance and Pensions; Merit de Jeu, Senior Managing Consultant specialising in Migration; and Rutger Meulman, Junior Consultant at Delta Capita.
In one of our previous articles New Dutch pension system first step in a wider shake up, we discussed the revolutionary changes planned for this €1.7 trillion pension system.
The March 2022 Dutch Pensions Act set a deadline for transition to the new system of 2027, with many mandatory steps along the way.
In the new system, everyone will accrue pension according to new and harmonised rules. This means old entitlements need to be transferred to the new system, which poses major challenges in transferring funds for participants.
The complex beauty of the Dutch system
Although highly valued, the Dutch pension system has a long and harsh history of complex changes to accommodate economic, social, political and demographic factors. These changes now add to the challenge of migrating every participant’s future income transparently.
This heaps pressure on pension administrators, who need to make high-quality calculations while working to a strict deadline. A complicating factor in the migration is that a number of pension funds is simultaneously making changes to their value chain in changing administrator.
The complex legacy, impactful transformation, and alterations in sourcing will increase the stress on participants – and on nervous regulators. We expect regulations to become stricter, similar to the way they have for banks and insurance companies.
The only way to migrate these pension billions successfully is to impose strict controls and prepare extremely carefully.
What can we learn from other financial services migrations?
The migration to the new system will be unprecedented, but we can increase the chances of success by learning lessons from other sectors. From comparable migration trajectories in banking and insurance, our experience suggests eight crucial elements for successful transition.
Our approach to date migration
To overcome data migration problems, pension funds and administrators need a thorough migration strategy. From our experience of moving large volumes of data from one system to another, we have created a model to guide complex migration projects.
We have shaped the core components through working with clients, and incorporated them into the following migration strategy and plan.
Dodging the biggest pitfall
Through our long-standing experience of complex migrations, we see the main mistake organisations make is underestimating what’s involved. By learning from other huge, complex migrations, pensions administrators and funds can limit their risks and optimise their resources.
In preparing for your migration, we strongly recommend using a framework that covers all aspects of a complex migration.
Understand more about how you can ensure a successful migration - get in touch today and contact Wouter Pijl, Merit de Jeu or Rutger Meulman at Delta Capita.
This article is part of Delta Capita’s series on the new Dutch pensions system. Previous articles in this series are: