Occupational Pension Schemes and the Dutch Pension System.

The second source of the Dutch pension system benefit in the Netherlands are the occupational pension schemes. These pensions are legally bound by the new Pensions Law (PW) of 2007. This gives some limiting conditions which have to be fulfilled, for example requirements with regard to the funding of the scheme.

Occupational pension schemes are schemes where the employer makes a commitment, as part of the terms of employment, to provide pensions and other post-retirement benefits to employees in retirement. The occupational pension schemes can be sponsored by a single employer or through industry- wide or collective labour agreements.

The Occupational Pension Schemes

Both employees and employers contribute to this scheme and is as such based on the years of employment of the individual employee.

The state tries to stimulate these pensions by excluding the paid premiums from taxes. The financing of the occupational pension schemes is different from that of the state pensions. It is the case that employees and employers now pay for the employees’ own pensions in the future. The ambition level of the pension payment, nowadays, is normally 70 percent of the average wage during the employees’ career. It is required by law that an occupational pension scheme is an independent and separate legal entity or an accepted insurance company.

The four different pension-performers (art 22 PW)

Firstly, the industry sector pension funds. These are funds on behalf of one or more industry sectors or parts of that. In the Netherlands especially the industry-wide schemes are important and widespread. These schemes are set up through organised negotiations between employers and employees. In the Netherlands the government is able to make the participation in an industry-wide scheme obligatory for all or some companies in a certain industrial sector. The government aims at an as high as possible amount of people who fall within the occupational pension schemes, because they want to improve the position of people during their retirement, as the state pension doesn’t provide for enough payment.

Secondly, the enterprise pensions funds. These funds are connected to one enterprise or a group of enterprises. In some enterprises they have an independent division which deals with the pensions and others have contracted the pensions out to specialized enterprises. In a big and stable group of enterprises it can be an advantage for employees to join in an enterprise pension fund, because most of the times the employer pays the full premiums. For the employer on the other hand, it can be a disadvantage that he can be held more directly responsible for a deficit of the pension fund.

Thirdly, a Dutch insurer who takes care for the pensions.

Fourthly it can be a foreign insurance company and the last performer can be a foreign pension fund. Article 9 PW makes clear that there are three different pension schemes.

• The first is the defined benefit scheme. That implies a payment of a specific amount at a specific age.
• The second is a capital agreement, which implies a payment of a specific capital at a specific age.
• And the third is the defined contribution scheme, where an available premium is put forward. Which of the schemes is in case applicable will depend on the agreements about that.

A calculation example employee pension contribution

• Salary € 34,544, – fulltime
• State pension franchise (2021) € 14.544, – fulltime
• Pensionsalary € 20,000, -fulltime
• Part-time percentage 80%
• Pensionsalary € 16,000, –
• Employee pension premium contribution (for example ) 4% per annum € 640, – per year
• Per month € 53.33 employee contribution

1. Maximum pensionable salary is set at aprox. € 112,000.
2. Forgotten employee pension contribution. Has your own pension contribution been forgotten on the salary slip? An employee can make up for this by paying it immediately via the next pay slip. Sometimes an employer also offers the opportunity to spread this over a period of the next 12 months.
3. Overpaying your own pension contribution. Please note that you will never be able to calculate your own contribution more than the premium is paid by the employer.
4. “Pension Distance Declarations” are out of the question. Here are the reasons. If you want to register an employee for occupational pension schemes, then think about a number of things. The date in service is usually set for example on 1 January , while the actual date in service may be far in the past. This can be a problem especially for the survivor’s pension. In that case, too little survivor’s pension is insured. Clearly state the expiry of the waiver so that it is official and accurate.
5. Partner definition. If in doubt, check the partner definition in a employee pension contribution. This differs from the tax partner definition. A pension fund or insurer sometimes makes specific demands on the partner definition.
6. Registration. Always report changes to the pension advisor. They help and correct where necessary. You will always receive a confirmation. That is so easy because from then on we take care of everything.

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 occupational pension schemes 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 en calculations

English contact form General (Third party) Liability application form Directors and Officers Indemnity Premium Hiscox CyberClear Insurance - premium IT Information Technology Liability - Premium Management Consultancy Liability = premium Pension defined contribution - calculation Audio - Dutch Business risks and insurances Complete list - Dutch Business Insurances