Amendment of rules in the pension scheme – own pension account
Earlier this year, draft regulations on own pension account were sent out for consultation. The consultation deadline was 3 August 2020, and the new rules will probably enter into force at the beginning of 2021. The purpose of the amendment of rules is to make it easier for employees to receive the best possible pension. Employees must be able to choose who will manage the pension capital, which will lead to greater competition in the market.
The new rules mean that employees who are members of defined contribution pension schemes can collect the pension capital in one account. This applies to both contributions from the current employer and earned pension capital from previous employment (capital certificate). If the employee does not make a reservation against the transfer, the collection of the pension funds will be carried out. Among other things, the rule change will mean that employees will not have to cover the management and administration costs for pension capital earned in previous employment relationships. The employee will also have access to choose their own pension provider to manage earned pension capital and future contributions.
A rule will also be introduced that electronic communication shall be the preferred form of communication in matters related to the pension scheme. This applies to both the employee, the employer, and the pension provider. The rule shall ensure that it shall be able to communicate in the simplest possible way in matters related to pensions. The employee can make a reservation against electronic communication as the preferred form of communication.
For employers, the new rules mean that they will have a duty to inform employees about the collection of pension funds in their own pension account. This involves informing employees about which specific pension capital certificates will be transferred, the size of the funds, the institution in which the pension capital certificates are managed and the effect of previously earned pension capital being transferred to the employer's pension scheme. The employer must also inform about the employee's right to enter into an agreement with a self-selected institution. It is the employer's pension provider who will be responsible for providing the employer with the necessary information, so that the employer can fulfill the obligation to information the employees.
The duty to provide information shall give the employee the opportunity to decide whether it will be worthwhile to transfer their pension capital certificates to the employer's pension scheme, another pension scheme, or whether the person in question should keep his pension capital certificates where they are initially managed.
In addition, employees will receive a saved-up pension, even if the employment relationship ends before 12 months have passed. This can lead to increased pension costs for the employer. Until the rule change, pension capital set aside for employees who have left within 12 months after the employment relationship was established has been returned to the pension scheme's defined contribution fund. This rule change will take effect from 1 January 2021.
