Dutch Military Staff To Switch From Final To Average Salary Accrual

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Pensions arrangements for Dutch military staff at civil service scheme ABP are to change from a final salary plan to an average salary scheme.

The change – to be introduced retrospectively as of 1 January 2019 – follows a new collective labour agreement (CAO) for the Ministry of Defence (MoD) between the social partners and the cabinet, said ABP.

It ends years of bickering about terminating one of the last final salary plans in the Netherlands, which, according to ABP, had become “too complicated to implement”.

The final salary plan with its high ‘franchise’ – the part of the salary that is exempt from pensions accrual – had also turned out to be disadvantageous for the many MoD staff who leave the employer early.

The new arrangement provided for a higher accrual rate and a lower franchise, while its accrual covered more bonuses, such as for exercise and duties in the air and at sea, according to ABP.

It added that contribution levels for military personnel would be established separately.

The trade unions said that the new pension plan would produce better results for most MoD staff with lower contributions.

A spokeswoman for ABP said the new arrangements largely addressed the pension fund’s initial objections.

Last August, the rank and file of the military unions rejected a CAO that included the pension plan. Subsequently, a dispute arose between unions, the employer and ABP, when the pension fund said it would implement an average salary plan but with a low accrual rate and the high franchise.

ABP and unions said they had to formally decide whether or not to withdraw their appeal in court rulings they had started on the issue.

René Schilperoort, vice chair of union AFMP, said that the most important change relative to the rejected arrangements was a clear compensation scheme for the employees who would be negatively affected by the transition to an average salary plan, particularly those who quickly climb the career ladder.