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5 important variables in a Dutch retirement plan

5 important variables in a Dutch retirement plan The future of ten employees financial security will largely depend on the Dutch retirement plan. It is important to understand how this plan works and which benefits they will be entitled to. It is also important to understand the choices they can personally make with respect to your retirement plan. After all, it is their retirement plan.
We have set out the options so that they can make well-informed decisions and choose the retirement plan that meets their individual needs. Please check also the state pension arrangements.

The options described below do not apply to every pension scheme. Which options apply will depend on the retirement plan your employer has selected. If you want to know which conditions and choices apply to the employees, check your copy of the pension regulations or review the introductory letter you received from the insurer when you started as a company the pension scheme.

Pension plans in Dutch retirement plans offer members a range of options. It is important to make sure that you are properly informed on options such as:

  1. Opting for a higher retirement pension (the benefit they will receive upon retirement) in exchange for a lower partner’s pension (the pension your partner will receive after your death) and
  2. a higher partner’s pension
  3. Retiring earlier or later.
  4. Opting for variable retirement benefits.
  5. Part-time pension.

Higher retirement pension (meer…)

English, pension-advice

Dutch Employee Benefits and Insurance risks

English companies wishing to settle in the Netherlands are faced with strict legislation about Dutch Employee Benefits and insurance risks.
The labour conditions are a fine-grained system of pension and Dutch employee benefits. Especially the terms and premiums for sick leave conditions and disability arrangements are to be sharply calculated. The premiums are often high and can affect the profits of your company. With professional guidance these costs can be mitigated. Sometimes the terms and premiums of Dutch Employee Benefits are mandatory, but often they can be lowered. Below you find a explanation of the pension system in the Netherlands.

Pension plan is a term that relates to a series of financial agreements that give your employee an income in retirement. A pension scheme generally consists of three parts:
1. A statutory state pension: from the age of 67, anyone living in the Netherlands will receive a state pension under the AOW General Age Act. The Dutch AOW pension (paid under the National Old Age Pensions Act, AOW) is a basic state pension. In general, everyone who has reached the AOW retirement age and resided or resided in the Netherlands was entitled to an AOW pension. The SVB pays your AOW pension from the day you reach the AOW retirement age that applies to you. It does not matter which country you currently live.
2. An employer’s pension: Under the administration of an insurer or pension fund, the contributions paid by the company will be reserved for the employee’s pension allowance. The pension fund will provide information on the target pension and the promised value in an Annual Uniform Pension Statement (UPO).
3. A supplementary pension: Your employee may have made private arrangements to supplement his pension through savings, investments or an insurance company’s or pension fund annuity.

Company Insurance risk
Insurance risks such as liability, fire, theft, and other risks are also important to be able to handle immediately. Liability can be a general liability, professional liability and/or a directors liability. (meer…)


30% Ruling: special tax regime for expats

30% rulingThe Netherlands has a special tax regime for expatriates, the so-called 30% ruling, which provides a substantial income tax exemption of up to 30%, for a period of up to 120 months. This is viewed as a reimbursement for the extra costs involved in living abroad.

More information

Gerrit-Jan Doorneweerd, registered Pension Advisor,
Amsterdam, +31 (0)20 6200825
Mobile, 0651 471 9 – six – five. (Also in the evening and weekends.)
Please give me a call

English, pension-netherlands

An important decision: when to retire?

munten bruinEmployees normally retire at the age of 67. They can choose to retire earlier or later, perhaps while continuing to work part-time, or to exchange the dependant’s pension for a higher retirement pension or vice versa. The options depend on your pension regulations.

The three parts of a retirement plan. Retirement plan is a term that covers a set of financial arrangements providing your employee with an income upon retirement. A retirement plan generally consists of three parts:

  1. A statutory state pension: from the age of 65, everyone who lives in the Netherlands receives a state pension under the General Old Age Pensions Act (Algemene Ouderdomswet AOW).
  2. An employer-sponsored retirement pension: under the administration of a pension insurer, the contributions paid by you and taken from your employee’s paycheck accrue to the retirement benefit of your employee. They provide information on the target pension and accrued value in the annual uniform pension statement (UPO).
  3. A supplementary pension: your employee may have made private arrangements to supplement his pension through savings, investments or an annuity from an insurance company.
English, pension-netherlands

An employee reaches retirement age – 4 steps

draaitrapStep 1
Six months before retirement, an employee will receive a letter from the pensioninsurer of pensionfund containing:

Step 2
An employee provides the pensioninsurer of pensionfund with:

Step 3
The pensioninsurer of pensionfund carries out the administration.
Theu process the information supplied and determine the final entitlement.

Step 4
The pension insurer of pensionfund makes the initial pension payment to your employee in accordance with the pension regulations.

Tip: It can be profitable for an employee to combine different pensions and annuities. 

English, pension-advice

Risks and your pension

toetsenbord met koptelefoonThe amount of your pension is not fixed and may change. In addition to changes in your private or work situation, there are also developments which are outside your control. These developments can affect the amount of your pension. We would like to explain these risks and their influence on your pension to you.

Inflation risk
Inflation decreases the value of money each year. This also applies to your pension. Think about it: you can buy less with €100 than you could ten years ago. Therefore your pension loses some of its purchasing power. You may think now that your pension will be sufficient, but be aware that your pension will lose some of its purchasing power due to inflation.

Investment risk
Your pension may (partly) be used for investments. Investing is never without risk: at this moment you do not yet know the final value of your investments. Depending on the choices made by your employer, you yourself can decide how much risk you want to take. This allows you to determine your own risk profile.

Interest risk
Are you about to retire? The pension amount you will receive does not only depend on the value of the investments, but also on the interest rates at that time. The lower the interest rate at that time, the lower the pension will be.

Longevity risk
Are you about to retire? The pension amount you will receive does not only depend on the value of the investments, but also on the life expectancy of the Dutch population. People are living longer and therefore receive pension for a longer period of time. The pension will be lower because we have to use the same amount of money to pay out your pension for a longer period of time.

English, pension-netherlands

30% ruling pension benefits The Netherlands

Pension accrual and the 30% rule (30 percent ruling) for expats

If certain conditions are met, expatriates may be eligible for the 30% rule. This arrangement means that there is a tax-free allowance which will be given up to 30% of wages. The tax free fee is for the extra cost of the temporary residence of the expat in the Netherlands. This allowance is tax not paid.

In principle you usually do not build up pension on the tax-free reimbursement of the 30% rulers. The pension benefits granted by your employer are based on your taxable salary; thus lower since the “top” is taken off as a tax free reimbursement.

The main rule is that the 30% reimbursement gives no accrual pension.

However there are two exceptions:
1. Incoming employees accruing pension over the 30% rule with an initial accrual pension prior to July 1, 2002. The pension may be continued until the end date of the existing approval of the tax authorities with the relevant employer. This exception applies until July 1, 2012 (or earlier termination date of 30% Decision);
2. If exchange of remuneration components held under a cafeteria plan.

Due to the 70% level of pension salary the widows and orphans pensions are also 30% lower. This gap is easily compensated with a private life insurance.

If you think I might be able to help you of your business
Gerrit-Jan Doorneweerd, registered Pension Advisor,
Amsterdam, +31 (0)20 6200825
Mobile, 0651 471 9 – six – five. (Also in the evening and weekends.)
Please give me a call

English, pension-advice

How to start a pension scheme in the Netherlands?

‘With which parameters are pension scheme(s) managed?’

For the aspects of pension management, we will only focus on pillar 2 the employee benefits. There are a number of parameters that can be used to influence the retirement provision. The first are parameters with respect to the pension scheme. Secondly, execution parameters can be used to influence the level of the retirement provision.

Parameters for a pension scheme 

The level of a pension depends on a number of parameters. These parameters can be seen as ‘controls’ that can be adjusted, and include:

Pension commitments are agreed between employer and employees. In the Netherlands organizations of employers and sometimes unions make the agreements together with AFM-registered pension advisors.

After the agreement has been made, the contract will be executed by pension institutions, like insurers or pension funds. The pension institutions do have influence on the aspects listed above. All these aspects affect the final pension to be achieved.

Contribution affects the active members. Indexation affects the sleepers and pensioners and possibly the active members. The best interests of all the people involved should be considered in the decision-making.
In principle, an insurer cannot adjust the controls in the interim: an insurer must comply with the conditions in the contract. An insurance contract is agreed for a number of years.

If the insurance contract expires of the legislation changes, the conditions can be adjusted again.

If you think I might be able to help you or your business
Gerrit-Jan Doorneweerd, registered Pension Advisor,
Amsterdam, +31 (0)20 6200825
Mobile, 0651 471 9 – six – five. (Also in the evening or weekend)
Please give me a call

English, pension-netherlands

Extracts from Insurance Claim forms

English, pension-advice

Fat pension cats

Dutch minister of finance Wouter Bos has withdrawn a measure that broke with the so reverse-rule (‘omkeerregeling’) which had been designed to limit tax benefits on pension contributions, but final pay pensions of above €500,000 will instead now be levied. A nine-hour debate was held in the Hague last week about fiscal measures against fat cat salaries and led Wouter Bos to withdraw his earlier regulation which saw the Dutch ‘omkeerregel’ stopped for pensions above €185,000.

The ‘omkeerregel’ was introduced as the Dutch fiscal treatment of pension accrual and was intended to allow pensions savings contributions to be tax-free up to a certain premium levels and conditions, while the benefits paid out are taxed. But ministers were unhappy with a proposal unveiled in September last year to impose a limit on controbutions, and announced in December 2007 they would reverse the plan ahead of its 1 January, 2009 implementation.
The second change unveiled by the minister now means final salary pensions of above €500,000 will now be levied with a 15% tax, to prevent highly-paid managers from holding untaxed money via their final pay pension plan. Pieter Omtzigt MP of the Dutch Christian Democrats told IPE his party supports both measures.
“Almost everybody in the Netherlands now has an average pay pension, so it is not very fair if the directors agree to a final salary pension and then inject it with a couple of million.” (source Ipe)

English, pension-netherlands