Pension benefits Netherlands 2020 easy scheme

Pension benefits Netherlands are 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 benefits Netherlands

Pension benefits Netherlands

From the age of 67/68, everyone who lives in the Netherlands receives a state pension under the General Old Age Pensions Act (Algemene Ouderdomswet AOW). State Pension benefits Netherlands. The Dutch AOW pension (paid under the National Old Age Pensions Act, AOW) is a basic state pension. As a rule, everyone who has reached the AOW pension age and lives or has lived in the Netherlands is entitled to an AOW pension. SVB will pay your AOW pension with effect from the day you reach the AOW pension age that applies for you. It makes no difference in which country you live at that time.

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2. Employer Pension benefits Netherlands scheme

Under the administration of an insurer or pension fund, the contributions paid by you and taken from your employee’s paycheck accrue to the retirement benefit of your employee. The pension fund will provide information on the target pension and accrued value in the annual uniform pension statement (UPO).

Calculation pension contribution employee (dutch)

Calculation defined contribution scheme

3. A supplementary Pension benefits Netherlands

Your employee may have made private arrangements to supplement his pension through savings, investments or an annuity from an insurance company or pension fund. This is not a pension benefits Netherlands because there is not an employer involved.

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Pension management

Good pension management depends on finding the right balance between competing interests such as attractive pensions, costs, certainty, indexing, risk and manageability. At the same time, proper account has to be taken of the interests of both the employer (the sponsor) and the employees. We have a wide-ranging experience of the various solutions that can be deployed to answer questions such as:

• How can organisations use their pension scheme to differentiate themselves from their labour market competitors?
• How can we minimise the risks and costs of their scheme?
• How can we offer participants attractive pensions in return for acceptable contributions?
• How can regulations and pension schemes be made comprehensible and operate transparently?

Good pension management enables organisations to provide pension schemes meeting the needs of current and future employees, while also helping them to achieve their organisational objectives. Good pensions mean employees can count on a financially secure retirement, while employers can attract and retain the right people at an acceptable cost and level of risk.

The key to good pension management, therefore, is to find the right balance between the various competing interests. Providing an attractive pension scheme comes at a cost, while there is also a tension between guaranteeing future pensions and preserving their value. Employers seeking to reduce risks by contracting out their pension scheme management also need to ensure they maintain sufficient control over the details of the scheme.

We have the knowledge and experience needed to advise organisations and provide them with a policy framework for resolving these issues. The wealth of knowledge built up during the sector’s long history means it has the expertise to deal with wide-ranging forms of pensions, whether they are defined benefit or defined contribution schemes or a hybrid form. And whether they are part of a sector pension fund or an organisation’s occupational fund or directly insured by an insurance company.

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 weekend.)
Please give me a call or send me your information below

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The solution for the Dutch pension regulation

Every pension plan as a customised product The opportunities for structuring pension plans are extremely wide-ranging. Choices need to be properly substantiated as these plans cover periods of several decades, and neither participants nor sponsors want to face unpleasant surprises. We will be pleased to help you complete your pension jigsaw.

The second pillar of pension provisions is important for businesses in that it is part of the compensation and benefits packages they offer and so a way for them to attract and retain staff. This means employers need to consult their employees or employee representatives to identify the pension plan most accurately matching the characteristics and wishes of their current and future employees, the employer’s own needs and resources, the standards and agreements applying in the sector and also the prevailing legislation and regulations.

There are many ‘buttons’ to select in this respect (see box). In other words, pension plans can be customised to suit individual situations. The choices to be made include opportunities to select employee contribution and pension levels, employer contributions, opportunities to cover various risks and the freedom to choose when to start receiving or paying out pensions.

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 weekend.)
Please give me a call or send me your information below

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Divorce/separation

If your employee is divorced or separated, his or her former partner is entitled to half the retirement pension built up during the marriage. The former partner can also waive this pension equalization. Such an arrangement must be set out in the divorce settlement.

Retirement pension scheme – Equalization of pension benefits

Former partners are legally entitled to half of the retirement savings accumulated during the marriage or registered partnership. Your former partner’s entitlement to these pension benefits will end at the time of your death. If your former partner should die before you, you will regain entitlement to the full pension benefits.

You and your former partner may agree to deviate from these standard arrangements. You may, for example, agree with your former partner that he or she waives pension equalization or a special partner’s pension.
Any such arrangements must be laid down in a prenuptial or postnuptial agreement or in a divorce agreement.

Partner’s pension – Divorce

Provided that an insurance policy is in place, you will have built up a partner’s pension for your partner until the date of separation or divorce. After the divorce, your former partner will retain entitlement to this pension, provided that the pension scheme provides for accrual of entitlement to a partner’s pension. He or she will receive this benefit from the date of your death. As this concerns a former partner, it is known as the ‘special partner’s pension’.

Remarriage/new partner

If you have a new partner in accordance with the definition of a partner in the pension regulations, he or she will be entitled to the remainder of the partner’s pension after deduction of the former partner’s entitlement.

Amount of the special partner’s pension

The amount of the special partner’s pension differs between pension schemes, and may depend on whether you die before or after the retirement date. Some pension schemes feature a partner’s pension on a risk basis, which means that your former partner will not receive a special partner’s pension. The insurer will notify you and your former partner, if applicable, of the amount of the special partner’s pension.

Orphan’s pension

Provided that an insurance policy is in place, your children will retain their entitlement to an orphan’s pension after your divorce. Whether they live with you or with your former partner is of no consequence to that entitlement.

  • 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 weekend.)
    Please give me a call or send me your information below

Information and Calculations

English contact form General liability applicationform Dutch Business Insurances

An investment pension or a guaranteed pension?

Your employer pays a monthly contribution towards your pension. Your employer determines whether he pays the entire contribution or if you should also pay a part. What happens with your contribution depends on the choices made by your employer.

Your options

When you start a pension plan, you build up (accrue) pension by investing. We call this your investment pension. If your employer has given you the option to choose a guaranteed pension, you can use (part of) your contributions for a guaranteed pension. You can also convert (part of) you investment pension value into a guaranteed pension.

So depending on the choices made by your employer there are two possibilities:

  1. An investment pension
  2. An investment pension and/or purchasing a guaranteed pension.

An investment pension

The insurer invest the contributions towards your pension by default using the so-called Lifecycle method. Lifecycle investing includes lowering the risks of the investments as you get closer to the retirement date. The idea is that if you are about to retire, you also prefer more certainty about the amount of your pension. If your retirement date is still far in the future, you have more time to compensate for any setbacks. Therefore it is wise to take a little more risk during this early phase with the aim to obtain a higher return. Depending on the choices made by your employer, you can choose to invest in a different way by taking more or less risks.

Advantages of investingDisadvantages of investing
It is possible that the return on the investments is higher than expected. Your final pension will then be higher than expected.The amount of pension that you will receive is uncertain. If the returns are lower than expected, your final pension will also be lower than expected.
Depending on the choices made by your employer, you can modify your investments to suit your personal situation. 

An investment pension and/or purchasing a guaranteed pension

By default, insurers invest your contribution using the Neutral Lifecycle. Once a year you can determine whether you want to build up (accrue) a guaranteed pension in addition to investing.

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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.

Pension benefits

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.

Exceptions

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.

Comment

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 with your business
Gerrit-Jan Doorneweerd, registered Dutch Employee Benefits & Insurances,
Amsterdam, +31 (0)20 6200825
Mobile, 0651 471 9 – six – five. (Also in the evening or weekend)
Please give me a call or send me your information below

Information and Calculations

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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 Dutch 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 plan offers 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.

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Higher Dutch retirement plan

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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:

  • A statement of the regular pension benefit.
  • Any options available (earlier or later retirement, etc.).
  • A form to supply any missing personal details.
  • A payroll tax statement.
  • A statement with respect to conversion of dependant’s and retirement pensions.

Step 2
An employee provides the pensioninsurer of pensionfund with:

  • A completed form before the retirement date.
  • The payroll tax statement.
  • The conversion statement, if applicable.

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. 

30% ruling pension The Netherlands

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

  • According to this rule, the employer may grant the employee a tax-free allowance of up to a maximum of 30% of his or her remuneration. The remuneration includes incidental and flexible forms of income such as bonus payments and stock options. Termination and pension payments are excluded.
  • In order to qualify for the 30% ruling, the following conditions must be met:
  • The employer must make a reasonable case that the employee possesses specific expertise that is not available, or is scarce in the Dutch labor market
    • The employee must be recruited from abroad
    • The employer must be a Dutch wage tax-withholding agent
    • The exemption is available for a period of 10 years (120 months).
  • After a period of five years, the tax authorities can request that the employer demonstrate that the employee still meets the conditions.

Pension accrual and the 30% ruling pension

If certain conditions are met, expatriates may be eligible for the 30% ruling. 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% ruling. The pension benefits granted by the 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. The 30% ruling pension consequences can be complicated. A correct pension scheme solution is possible. 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. Several other solutions for the 30% ruling pension problems are possible.

If you think I might be able to help you of your business with the 30% ruling pension:

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 or fill in the form.

Information and Calculations

English contact form General liability applicationform Dutch Business Insurances

Extracts from Insurance Claim forms

  • “I started to slow down but the traffic was more stationary than I thought.”
  • “I pulled into a lay-by with smoke coming from under the bonnet. I realized the car was on fire so took my dog and smothered it with a blanket.”
  • Q: Could either driver have done anything to avoid the accident?
    A: Travelled by bus?
  • This Norwich Union customer collided with a cow. The questions and answers on the claim form were:
    Q: What warning was given by you?
    A: Horn
    Q: What warning was given by the other party?
    A: Moo
  • “I started to turn and it was at this point I noticed a camel and an elephant tethered at the verge. This distraction caused me to lose concentration and hit a bollard.”
  • “On approach to the traffic lights the car in front suddenly broke.”
  • “I didn’t think the speed limit applied after midnight”
  • “I knew the dog was possessive about the car but I would not have asked her to drive it if I had thought there was any risk.”
  • Q: Do you engage in motorcycling, hunting or any other pastimes of a hazardous nature?
    A: I Watch the Lottery Show and listen to Terry Wogan.
  • “Windscreen broken. Cause unknown. Probably Voodoo.”
  • “The car in front hit the pedestrian but he got up so I hit him again”
  • “I pulled away from the side of the road, glanced at my mother-in-law and headed over the embankment.”
  • “The other car collided with mine without giving warning of its intention.”
  • “I collided with a stationary truck coming the other way”
  • “A truck backed through my windshield into my wife’s face”
  • “A pedestrian hit me and went under my car”
  • “In an attempt to kill a fly, I drove into a telephone pole.”
  • “I had been shopping for plants all day and was on my way home. As I reached an intersection a hedge sprang up obscuring my vision and I did not see the other car.”
  • “I was on my way to the doctor with rear end trouble when my universal joint gave way causing me to have an accident.”
  • “To avoid hitting the bumper of the car in front I struck the pedestrian.”
  • “My car was legally parked as it backed into the other vehicle.”
  • “An invisible car came out of nowhere, struck my car and vanished.”
  • “I was thrown from the car as it left the road. I was later found in a ditch by some stray cows.”

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