Calculation module collective flat rate pension WTP-proof makes calculations based on current pension rates. Explanation of all entries can be found on the information page. This calculation module is specifically intended for employers. Pension insurers’ products may differ in details. Here is the graduated flat rate pension module.
Information collective flat premium pension
Collective pension premium arrangement information
Pension employers, 11 benefits and 3 cons
Ages collective flat rate pension scheme in a row
- Starting age. The starting age is the age from which the employee begins to insure their pension scheme. The minimum starting age is 18 years.
- AOW age (National Old Age Pensions Act). Determined by the government. The age cannot be changed by an employee. There is no obligation to stop working either. The tax rates after the AOW age are lower because no more national insurance contributions are due.
- Pension age. The actual date on which the employee starts their pension benefits. a good collective flat rate pension scheme takes this into account.
- Pension target age. The age with which the scheme has actuarially calculated when the employee will retire. Possible pension target ages are: the employee’s age at 60, 61, 62, 63, 64, 65, 66, 67, and 68.
Pension agreement
The pension agreement is an agreement between employers, employees, and the government on how pensions will be arranged in the Netherlands. The aim of the agreement is to finance pensions in a sustainable way, so that people have enough income to live on when they retire.
A flat rate pension scheme is a type of premium for a pension insurance where everyone pays the same premium % on the pension income.
Which salary
Flat rate pension as a starting point for the amount of the collective flat rate pension investment, the pension base is always taken. This pension base is determined by an employee’s salary. If the salary is taken then this is called the pensionable wage. There can be no pension accrual over the future AOW. This AOW construction results in a so-called franchise. This must therefore be deducted from that pensionable wage,
Pensionable wage
12 times fixed monthly salary (+ possibly 8% holiday pay).
13 times fixed monthly salary (+ possibly 8% holiday pay over 12 months).
Maximum pensionable wage is approximately € 130,000,-
Pension base for calculating a collective flat rate pension scheme = Pensionable wage -/- AOW franchise.
AOW franchise collective flat rate pension
The AOW franchise is usually 100/75 of the single AOW (including holiday pay) for a married person. Sometimes there are other calculations for the construction of the AOW. The exact amounts of the AOW via the SVB. The AOW franchise via our pension page.
With a franchise, an amount can also be chosen to set up an excess pension scheme correctly. Example is taking the maximum Hospitality Industry Pension Fund pension salary as construction in a collective flat rate pension scheme.
Collective flat rate pension scheme
When stating an example pension capital from a collective flat rate pension scheme, account is taken of an expected return. Then an indication is given of the pension benefits; and these too depend on the interest rate. Both amounts can always be found in the calculations. The actual interest rate and the expected return will (always) differ from reality.
flat rate pension The amount of the pension benefits also depends on the expected life expectancy. If you start pension benefits early, more benefits will have to be purchased from the pension capital. Furthermore, the presence of a partner, interest rate, rate, and choice of the type of benefit will be influential.
Purchasing pension on the pension date
With the available premium, capital is built up on the pension target date. At that moment, the employee can purchase a benefit. The rate is determined based on the age of the employee and the market interest rate. On the pension date, an old-age pension is purchased with the capital available at that time, possibly in combination with a partner’s pension. Insuring the pension thus provides a (often) necessary supplement to the AOW.
Choice type Collective flat rate pension scheme.
% choice old age pension of the collective flat rate pension scheme;
Financing survivor’s pension and orphan’s pension;
Indexing of pensions; Premium exemption in case of disability;
Additional disability coverages;
Pros and cons of the various pension systems;
Investment opportunities, lifecycles, and risks;
Course of pension charges;
Tax legislation and financial consequences long term.
Purchasing flat rate pension on the pension date
With the available premium, capital is built up on the pension target date. At that moment, the employee can purchase a benefit. The rate is determined based on the age of the employee and the market interest rate. On the pension date, an old-age pension is purchased with the capital available at that time, possibly in combination with a partner’s pension. Insuring the pension thus provides a (often) necessary supplement to the AOW.
Survivor’s pension or Partner’s pension
We prefer to talk about survivor’s pension than the partner’s pension. After all, survivor’s pension also includes children who are insured with an orphan’s pension. The survivor’s pension can be insured in different ways. But usually, a fixed benefit that is lifelong for the partner and until the children are 21 or 27 years old at the latest. The premiums are almost always paid by the employer.
Calculation of partner’s pension
Partner’s pension before the pension date is a percentage of the pension base multiplied by the number of years of service. The partner’s pension can be insured based on final pay or average pay. The maximum accrual percentage for final pay is usually 1.160% of the pension base per year of service. The maximum accrual percentage for average pay is often 1.313% of the pension base per year of service. The risk premium for partner’s pension comes on top of the available premium.
The government ensures with the survivor benefit from the General Survivors Act (Anw) that survivors have a basic income. The Social Insurance Bank (SVB) pays out this benefit.
Calculation of orphan’s pension
Orphan’s pension is a percentage of the pension base multiplied by the number of years of service; end age 18, 21, or 27 years. The orphan’s pension is doubled for full orphans. These are children whose both parents have died. During the period of student finance, the benefit is often extended until at most 27 years.
General Survivors Act (ANW)
The General Survivors Act (Anw) provides survivors with a basic benefit under certain conditions. Every resident of the Netherlands is automatically insured for the Anw. If you are a survivor with children up to 18 years of age, you are eligible for a survivor’s benefit. Or if you are disabled and you have lost your partner. Further conditions apply, however.
Postponing collective pension rights
Many employees, as they get older, have always accumulated some collective pension rights somewhere. Often premium-free from a previous employment. It is unpleasant if a pension fund or an insurer wants to pay out these on the agreed date. Then there is a benefit at a time when the employee is not waiting for it. Postponing the accumulated capital in a collective flat rate pension scheme is then the solution. There are legal rules for this, but there is more flexibility than before. Many collective pensions know index actions. This makes decisions on this extra important because equal pensions or rising payouts can make a big difference in the long term.
Collective flat rate pension capital through investment
Recently, the Improved Premium Scheme Act has come into effect. An important consequence of this law is that in an available premium scheme, the possibility exists to continue investing after the pension date. The aim of this new choice option is to achieve a better pension result at an acceptable risk. Until recently, it was only possible to convert the accumulated capital into a fixed benefit. When determining the amount of a fixed benefit, the interest rate is an important element. And that has been low for years. And that often means a lower pension than expected and hoped for. That can now be done smarter since recently. Here more information about continuing to invest and pension.
Lifecycles collective flat rate pension
The asset accumulation in a collective flat rate pension scheme is done through investing. Investing wisely is therefore a big challenge. An investment fund with a guaranteed end capital often yields too little for a good pension. Investing in stocks offers more chance of a higher return, but also has an increased risk that the capital decreases in value. With the right fund and a well-considered policy via Lifecycle investing, a good mix between return and risk is achieved.
What are lifecycles?
Lifecycles take into account your age and the period until the moment you retire. If you are young, the contribution is invested with more risk to give the starting capital significant growth opportunities. As your pension date approaches, the investments become less risky. A substantial pension capital has already been built up with which – just before the pension date – less risk may be taken. Every year they check whether the actual investment mix still matches the chosen investment scheme in a collective flat rate pension scheme. If necessary, the investments are automatically adjusted.
Passive lifecycles
flat rate pension In a collective flat rate pension scheme, to keep costs as low as possible, you are invested in so-called passive investment funds. A passive investment fund follows the benchmark. A benchmark is a predetermined standard (for example, the AEX, or the DowJones). Unlike an active fund, a passive fund is not actively managed. As a result, returns are comparable to those of the benchmark. The fund manager tries to follow the benchmark and not to beat it.
Uncertainties collective flat rate pension scheme
In this calculation, we assume that the salary, franchise, premium, and return remain the same until retirement age. Of course, reality is different. Therefore, the actual pension capital at the pension date will also be different than initially thought in a collective flat rate pension investment. This risk is limited because a Lifecycle fund will reduce the investment risk further as the retirement age approaches.
Investment profile
The insurer usually invests your premium according to a neutral profile. If you prefer a defensive or offensive investment strategy, you can indicate this by filling in an investment profile. During the term of the insurance, this profile may change due to changes in your personal and/or income situation. Then fill in an investment profile again to see if your current investment mix still matches your personal situation.
Old-age pension from your retirement date
The old-age pension starts on your retirement date. With the accumulated investment value, you purchase an old-age pension on the retirement date. The accumulated value is paid out periodically until you die. If your partner is still alive, then the payout continues for 70% on your partner’s life. You can also choose a different ratio between the old-age and partner’s pension. The value development depends, among other things, on the investment returns as well as on the amount of the premium you pay in. You determine that yourself. You also determine when your pension should start. That can be at reaching the retirement date, but earlier or later is also possible.
Choice of insurer and product offerings
- Comparison of conditions;
- Flexibility in a collective flat rate pension insurance;
- Administrative process; Insurer’s solvency;
- Profitability of pension accumulation;
- Service and support duty of care;
- Choice of one-year or level term risk premium;
- Conditions for disability risk;
- Discount rate for the accumulation and pension payout phase;
- Build-up of costs and returns;
Pension age 68 years
It is good to start with an important difference between the different ages:
- AOW age. Legally established and easy to calculate at SVB. Calculate AOW age.
- Pension target age. The date on which the pension capital or the pension benefits start. See also below the message “The legal background”. The pension target age is thus the age at which one retires according to the pension scheme. At that age, all fiscal limits of the collective flat rate pension scheme are based.
- Your own retirement age. In other words, the age at which you or your employees stop working and “retire”. There is basically nothing about this in the pension law. That decision lies with you but will depend on the financial situation.
The words matter in the discussions about pension to avoid a Babylonian confusion of tongues.
- Pension is thus not AOW (1st pillar).
- Pension is pension if it says pension (2nd pillar) on it.
- Pension is not annuity (3rd pillar)
Retire later?
The pension date of 68 years is flexible. You can choose a pension date between 60 years and the first of the month in which the AOW age plus 5 years is reached provided it complies with tax and legal regulations. The capital is then recalculated first. With that capital from the collective flat rate pension insurance, the pension situation can be filled in according to your own choice.
What is a flexible flat rate pension exchange?
When you retire, you can choose to exchange part of the partner’s pension for a higher old-age pension. Of course, this requires the partner’s consent. When the old-age pension starts, you can choose for a higher or just a lower pension in the initial period. Of course, the pension benefit will then be lower, respectively higher, in the subsequent period. The lower benefit must in both cases be at least 75% of the higher benefit.
Salary limitation for pension accrual
The government further limited pension accrual as of January 1, 2015. The pensionable wage is capped at approximately € 130,000,-. This limit is adjusted annually. This maximum salary is reduced by the franchise (future AOW benefits). The maximum pension base will therefore be approximately € 115,000,-. This is thus the maximum base to which the premium scales are applicable. on this – maximum premium – page the maximum premiums are directly visible.
Who benefits from a too high collective flat rate pension?
Rules apply to the maximum height of the pension. in theory, the pension scheme could be adjusted. The practice is that this has not happened with any pension insurer yet and the chance is also very small. If the pension is too high during a test, the pension insurers are legally obliged to pay the excess to themselves. We assist with the testing at
- The start date of the pension
- Mutual exchange of pension
- Value transfer
- Divorce or termination of partnership
- Emigration
- Death
- Relevant change in tax legislation.
The pension benefits are taxed. The pension insurer or pension fund withholds the due payroll taxes on pension benefits.
No medical examination or health declaration
No medical guarantees (examination or health declaration) are needed at the start of a pension scheme.
Corporate pension SME employment conditions
A collective flat rate pension scheme for the employees is a step many employers hesitate to take. Of course, that is understandable because they are after all employment conditions. But pension means a lot to many employees as an important addition to these employment conditions. Attracting new employees becomes easier and the costs are fiscally more advantageous than paying it out as salary.
Also read “Pension employees the 11 advantages and 3 disadvantages”.
Choose the right form of flat rate pension scheme
- Fixed premium, scale available premium, average pay or final pay scheme. In other words, Defined Benefit or Defined Contribution or a combination.
- Check if there is already a basic scheme in the form of, for example, a voluntary corporate pension fund scheme.
- The financing and choice of the components are the details discussed in every pension scheme.
- Scale choice in a collective flat rate pension scheme of the old-age pension;
- Financing survivor’s pension and orphan pension;
- Indexing of pensions;
- Premium exemption in case of disability;
- Pros and cons of the various pension systems.
- Choice of insurer and product.
- The providers are plentiful. Choose wisely. Look at the following elements:
- Comparison of conditions;
- Flexibility;
- Administrative process;
- Insurer’s solvency;
- Profitability of pension accumulation;
- Service and support duty of care;
- Choice of one-year or level term risk premium;
- Discount rate for the accumulation and pension payout phase;
- Build-up of costs and returns in a Collective flat rate pension insurance;
- Exit clauses and the entry and exit risk.
Implementation of the collective flat rate pension scheme collective pension calculations
- Ensure good guidance and advisor. Not only the choice in advance is important; the implementation in the company is also essential to avoid future worries.
- Drawing up of pension regulations and pension agreement;
- Textual assistance implementation employment contracts and staff guide;
- Guidance of the administrative tasks;
- Check pension documents;
- Explanation of the pension scheme to your staff.
- The desired investment risks for the participants. Do you want a lot or little choice for the employees? Cost fluctuations with value transfers. Value transfers can still have consequences for employers. Analyze them in advance.
- Mandatory CAO or voluntary joining a CAO. It can be attractive for an employer to join a voluntary pension scheme from a sector.
- What consequences do the AOW age and the capping of the pension salary have on the employment conditions per group?
- Check whether all requirements from the Pension Act and the associated tax legislation apply to the pension scheme. Small mistakes in excluding groups can have long-term effects.
- Also, the Compulsory Occupational Pension Scheme Act (Wvb) sometimes influences a pension scheme. Have it checked.
- The complex Work and Income According to Work Capacity Act (WIA) affects the pension scheme. In most pension schemes, the risk of disability is also insured. The schemes must match well.
- The Equal Treatment Act sounds like a regulation that every employer adheres to. But we still see differences thus pension scheme registration of temporary and permanent staff. But also unjustified declarations of distance are still abundantly present among employers.
Pension advisor
- A pension advisor will check who are authorized to enter into the collective flat rate pension scheme. Also, the works council can exert decisive influence so check in advance what requirements are set by pension insurers and advisors in the discussions.
- The employer’s pension advisor or the works council’s pension advisor should be different advisors. Both have (sometimes) opposing interests.
- Involve the accountant in the discussions as an employer as well.
- It can be attractive to set up a temporary scheme pending the definitive setup. Ensure that all stakeholders know the differences.
- Assess together with the advisor whether a Tender can/should be issued;
- Let custom calculations be made. This provides an extra element in the total comparison of the pension providers, allowing you to better value the proposals of the various providers.
- Existing implementation agreement, pension regulations, start letters present? Then check carefully if every difference is explainable with a change.
- Collecting background information about the different pension providers provides a valuable source for making correct decisions.
- Every insurer’s product has specific product features. Let those be clear in advance of a scheme
Pension communication
Pension communication towards stakeholders is an increasingly important part in every collective flat rate pension scheme.
Ensure that the participants know the details and accept them if necessary.
And do not forget to ask for the works council’s consent. Pension courses can effectively contribute to a valued pension scheme.
Who informs them with what information and when?
- The tax authorities;
- The pension provider;
- The participants;
- The accountant;
- The shareholders.
- Pension management
- Works Council
There are active and inactive participants. Make agreements on how the treatment is. The guidance in- and out of service. As an employer, you do not want to be confronted again with pension matters of starters just as little as with leavers. Correct handling is, however, crucial due to the substantial risks if the requirements for, for example, timely registration are not met.
Logistics collective flat rate pension scheme
- Administrative guidance and control of value transfers. Some employees want to know the ins and outs of the advantages and disadvantages. Their good right but within a company, the practical knowledge to handle that efficiently often lacks. And the pension providers only provide colored information.
- Adjusting pension scheme to salary changes. It seems so simple. But our experience is that there is at least one case among every 10 employees that needs technical attention.
- Personal changes at an individual level. Address change, a different partner, children, value transfers, disability, etc. Passing on the mutation is often just a fraction of the time investment. Personal guidance and explanation are also often rightly seen as necessary.
- Legal consequences of legislative changes. Over the past 10 years, there have been almost monthly changes that sometimes had far-reaching consequences. The upcoming change of the pension target age to 68 years is another next step.
- Financial cost control collective flat rate pension scheme contract. Once a pension provider is chosen, there is a constant need to limit costs. Letters from insurers with “please sign below” including an administrative invoice packaged in a current account pension overview, are seen way too often.
- Insurance consequences of product changes. Do the new product properties of a collective pension scheme still match the promise? Without control, the responsibility for good corporate pension management lies with you as an employer.
- Coordination of pension consequences of retirement, disability, and death of an employee. At that unexpected moment, immediate technical action is needed but especially also careful guidance is wise.
- Information provision to, and preparation of, works council meetings. For a well-prepared employer, a pension scheme does not have to be a problem. We provide the substantiation and guidance through thorough corporate pension management.
- Recording pension texts in staff guides and employment conditions. It is often a surprise if the intended pension scheme, the promise in the employment contract, the staff handbook, and the Pension 1-2-3 information for the employee, are in line.
- Administrative logistics around policies, pension agreements, and implementation agreements. We help with clear logistics, archiving, and reporting.
- Control of premium setting, settlements, and processing of employee’s own contribution. Do you want a better insight into the costs and the remittance? Come talk to us.
- Processing and control of additional coverages such as WGA-gap/excess and ANW Gap and premium exemption in case of disability. Pension is often part of a comprehensive package of employment conditions. It is important that these matters align and are administratively easy to process.
- Information provision to payroll administrator. Calculating, for example, a 30% rule or the correct own contribution also proves to be a challenge for experienced payroll administrators.
Employees say “no”
Of course, every employee would like a higher salary. But the secondary employment conditions such as the collective flat rate pension scheme are also important. The counterarguments are listed.
- They prefer a higher salary. But for the employer, that is usually unfavorable. Also because of the other employer charges, that is often much more expensive. Not offering employees a pension scheme can therefore be financially disadvantageous for employers.
- No one understands pension. That does not have to be a problem for the employer and employee; therefore, the employer hires a pension advisor. Advice for the employer and if a company wants, individual guidance of the employees.
- I only have young people employed and they have no need for a pension. Practice shows otherwise. Especially for young people, a pension is a solution they would not arrange themselves otherwise. Young people have young relationships, young children, many financial worries, and little financial knowledge. Giving employees a pension scheme is taking over responsibility partially. That is paternalistic but therefore not less necessary.
- My employees only stay for a while and then they leave again. Someone who has 42 employers with 42 pension schemes will eventually build up as much pension as someone who “neatly” stays with the same boss for 42 years.
- They can better decide for themselves how to spend their money. Practice shows that the money goes to household, vacation, and lifestyle. That’s not a condemnation but a fact. Setting aside money for later is a difficult choice for an employee.
- Employees can invest their money smarter themselves than in a collective flat rate pension scheme insurance. We have never met that employee yet. Lack of knowledge and scale are just a few reasons that make that argument a fable.
- By that time, my pension will have evaporated anyway. With an available pension scheme, there is a personal pension pot. That does not evaporate like with some pension funds. No one else may touch that money.
- Pension is expensive. An employee will see an own contribution as very normal. An employer can thus strongly limit the costs of the pension scheme. Feel free to calculate it yourself.
And a few “soft” arguments:
The company’s image. For employees, working at a company with/without a pension scheme will make a difference. Especially with “equal suitability” an employee would rather choose a company with a pension scheme. Not offering a collective flat rate pension scheme can be an extra hurdle for attracting qualified personnel.
Salary increase instead of pension. Especially with a changing staff, after a while no one remembers exactly what the considerations were of the employer to not have a pension scheme. And first giving a salary increase and later still starting with a pension scheme, makes it very unfavorable for you as an employer.
Death. An employer does not want, in the event of an employee’s death, to get a call from the private partner asking if there was actually a survivor’s pension scheme.
Disability. In case of an employee’s disability, if there is no pension scheme, the possibility to continue building up a pension for the employee stops.
Why us?
Your employees are your business capital. This must be handled with care. Especially when it comes to employment conditions. We ensure that you remain satisfied with this. Fast if it can be done quickly and thoroughly if that is useful for a pension scheme. We’ll keep our distance, if that’s what you want. We are close, if that is appreciated; even if you want to have a discussion in the evening or at the weekend. Read the personal story of Gerrit-Jan Doorneweerd.
✅ Handy online premium statement
✅ Save time with unique online forms
✅ Efficient and day-to-day processing
✅ Affordable and suitable for employees
✅ Professional employment conditions provision.