Defined contribution scheme improvement Act
Last update: July 15, 2016
On September 1, 2016, the Defined Contribution Scheme Improvement Act came into effect. This Act makes it legally possible within a defined contribution scheme to continue investing after the retirement date, instead of purchasing a fixed-rate periodic benefit (annuity). The resulting annual pension benefits are expected to be higher on balance. However, the benefits will fluctuate from year to year (within a certain bandwidth). The participant will not only have to choose to continue investing on the retirement date, but also in the years before this date. When purchasing a fixed-rate periodic benefit, the interest risk will be decreased gradually over 10-15 years before the retirement date, to ensure that the expected periodic benefit amount will not fluctuate too much over the last years. If the choice is made to continue investing after the retirement date, the decrease of the interest risk would be less logical. This is why the participant will have to make a choice before the retirement date.
