In the Netherlands, as an employer you may in principle decide for yourself whether you offer a pension to employees. However, in many cases there is an obligation based on the Act on mandatory participation in an industry pension fund.

If you are wrongfully not affiliated with a mandatory industry pension fund, this can have enormous financial consequences. The fund can namely claim unpaid premiums with retroactive effect – sometimes up to 20 years back. Therefore, it pays to periodically investigate whether participation is mandatory.

The Core: Mandatory Participation in Industry Pension Fund

The Netherlands has more than 50 mandatory industry pension funds, each with its own scope of application: legal rules that determine which companies must participate mandatorily. As an employer, you must assess for yourself whether you fall under this. This is often more difficult than it seems. If you are wrong, this can cost millions.

Industry pension funds actively monitor and initiate investigations with employers who may not be affiliated. This can even lead to legal proceedings.

Practical Example: is a Pancake a Cookie?

In a court ruling, the question revolved around whether a pancake is a ‘cookie’ and whether an employer was therefore required to participate in the pension fund for the Confectionery Industry. The fund claimed over 8 million euros in outstanding premiums. The judge ruled that the pancake was not a cookie, making participation non-mandatory. This example shows that mandatory participation is not obvious and can entail major financial risks.

Risks for Employers

Not affiliating while this is mandatory can lead to:

• Retroactive premiums (up to 20 years)
• Interest and penalties
• Legal proceedings
• Reputational damage

Our approach: certainty through scope of application research
We advise employers to periodically conduct a scope of application investigation. In doing so, we examine among other things:

• Whether your company falls under the scope of application of a mandatory pension fund
• Whether exemption is possible
• Whether changes in business activities or mandatory participation decisions have impact
• Whether actual activities align with the Chamber of Commerce registration

Tips for employers

1. Regularly check whether your sector has a mandatory pension fund.
2. Have a legal scope of application investigation conducted.
3. When in doubt, request confirmation from the pension fund.
4. Register employees in time as soon as participation becomes mandatory.
5. Do not rely solely on your SBI code; the actual activities count.

Conclusion

While as an employer you may often decide for yourself about offering a pension, this freedom of choice lapses if you fall under a mandatory pension scheme. Non-compliance can have major financial consequences. Therefore, have a scope of application investigation conducted in time and periodically.

Would you as an employer like to know more about mandatory pension participation or have a scope of application investigation conducted? Our employment law specialists advise and guide you in every phase, so that you minimize risks.