The new pension system, which has been going on for years, was passed by the Dutch House of Representatives with the majority vote.
Pension law is changing. With the approval of the Senate, the amendments will become legal in 2023. The law, which will be a transparent and personal system, will allow early retirement. You will be able to withdraw money from the fund and use your days off for early retirement.
The new pension system includes:
- The AOW (General Ageing Act) and the pension will remain stable
- The new system will have a dynamic structure, pensioners will have a personal pool, and the citizen will be able to instantly follow the developments in the salary and pension fund online.
- In 2027, all pension funds will be transferred to the new system.
- RVU (Early Retirement Plan) will be implemented, in case of an agreement between the employer and the employee, 3 years early retirement will be possible and this agreement will be supported with low tax in order to reduce the cost to the employer.
- The scope of the right to accumulate 50 weeks of leave and use it for early retirement is extended to 100 weeks. Those who have accumulated enough leave days will be able to use it to retire about 2 years earlier.
- As of July 1, 2023, participants can withdraw an amount from the pension fund for one time only. For clarity, let’s take an example, you are 50 or 55 years old and you have worked continuously until this age. To meet a need, you can withdraw a one-time amount of money from the fund and use it as you wish. Depending on the amount you withdraw, your monthly income will decrease when you retire.
- Self-employed will also be able to participate in the new pension system.
While the entire pension system seems to be changing, most things will remain constant. The AOW (General Ageing Act) and the pension will remain stable. In other words, you will continue to receive this salary as long as you retire and live. If you die before you can retire, your current spouse or ex-spouse will still receive a survivor’s pension.
Let’s talk about some situations that will change with the new system. For example, you will know exactly how much money is invested in your pension each month. Since the amount of the salary also depends on the investment results, you will also be aware of the increase or decrease in your salary. Since your pension will increase when the economy is doing well or decrease when the economy is getting worse, new rules will be added to ensure that this salary does not fall rapidly. In other words, your pension will be in a dynamic structure.
If your current pension is given to you by your employer, unfortunately, the mentioned system will not be applicable to you until 2027. Because by 2027 at the latest, all pension funds have to switch to the new system. Legally, some funds can switch earlier, but until then, the new system has been given time to switch.
The government concluded a contract with new agreements on pensions and old-age pensions. Thanks to this agreement, it is aimed to create a more transparent and personal system. Let’s examine some of the agreements in this contract together. For example, we are talking about changes such as a slower rise in the state retirement age, new regulations on early retirement for those with heavy work, extra choice in retirement for everyone, better post-death pension, compulsory disability insurance for self-employed people.
Demographics, the economy, and the labor market are different things. In recent years, the number of retirees has exceeded the number of working people. People no longer work for the employer. They prefer to change jobs more often or even start their own business.
In 2020 and 2021, the state retirement age was set at 66 years and 4 months. In 2022, it was emphasized that the state retirement age will increase by 3 months, and it is stated that it will reach 67 years old in 2024. This means that the state retirement age is also rising.
From 2025, there will be no one-year increases in the state retirement age, only eight-month increases.
From 2021 to 2025, employers and employees can agree on early retirement. The Government supports this agreement by temporarily easing the tax on RVU (Early Retirement Plans). Employers can provide a benefit of approximately 22,000 euros per year for their employees up to three years before the state retirement age, without levying RVU tax in case of early retirement. In this case, it will provide an advantage for early retirement.
As of 2021, the financial coverage for the savings permit was increased from a maximum of 50 weeks to a maximum of 100 weeks. Employees can also determine, in mutual consultation with their employer, whether they can use their additional leave for early retirement, paid leave or retraining.
Pension contracts offer participants an additional option. All pension providers have to offer it. Participants, on the other hand, can receive an amount of payment at once.
As of July 1, 2023, participants can withdraw an amount early from their salary for one time only. But if they do, the remaining pension will be lower for life. Therefore, some conditions apply. These conditions are, for example, that the amount is no more than ten percent of the pension, that the amount can only be withdrawn on the date of retirement, and that stacking is not possible with a high or low pension.
For some people, getting a one-off amount of retirement assets early on can be attractive to higher payments after retirement. Because people may want to travel early, renovate their own home, pay off debts or arrange care facilities.
If one of the couples dies after the retirement date, the pension is terminated. The widow’s pension usually starts later. Better rules for the widow’s pension in general will follow.
The innovations also include measures that will change the situation of orphaned children for the better. According to the law, the last age to receive the orphan’s pension will now be 25. All retirement plans must adhere to this final age of 25. The maximum amount for the orphan’s net is twenty percent of the participant’s salary.
There will be only one type of joint pension going forward. The pension of the new partner will be insured with risk insurance. It means that the spouse of the deceased person received a benefit while the person was a participant in the retirement plan. So being a member means that someone is paying for a retirement plan. In this case, maximum fifty percent of the salary can be insured for the spouse’s pension. As a result, participants have the opportunity to clarify how much they will receive in the event of the partner’s death.
The spouse’s pension will no longer depend on the number of years worked in a service. A maximum of fifty percent of the salary will always be insured.
The National Government requires all self-employed persons to be compulsory insured against incapacity for work. The government wants to achieve this with a proposal from the social partners. With the obligation to have insurance for the self-employed, all working people will soon be protected against the consequences of incapacity. Compulsory insurance also reduces costs and risks for society.
There will be no mandatory retirement one for self-employed self-employed for the time being. However, the government will examine how the self-employed can join the pension system voluntarily in their industry or company.