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In the Netherlands, pensions consist of at least one of the following elements: a state pension, a supplementary pension and/or private insurance.
Old Age Pension (AOW)
In the Netherlands, everybody who reaches the state pension age, will receive a general old age pension (AOW). This is the basic state pension. Everyone residing or working in the Netherlands builds up this pension over the years. Since 2013, the state pension age is gradually changing, until it reaches 67 years in 2021. As of 2022 the state pension age depends on the average life expectancy in the Netherlands.
Employees can accrue a supplementary pension through a group pension scheme. Usually, this is not available for entrepreneurs. However, if they, for instance, are working in the notary or healthcare sector or in ports, they can arrange a supplementary pension with their occupational pension fund. The construction and finishing sector, for instance, offers a sector pension fund. Entrepreneurs may also choose to join a General Pension Fund (Algemeen Pensioenfonds, APF)
Anyone can further supplement their pension with private insurance, investments or their own wealth. You may want to save for your retirement by taking out a retirement annuity contract (lijfrenteverzekering). A retirement annuity contract is an investment product or account structure that you can use to save for guaranteed periodic payments when you reach retirement.
Right to retirement pension information
Pension funds must provide their participants with adequate and appropriate information concerning their pension, so that they know what to expect upon retirement. This information must also clearly show the financial implications of any choices participants may make or of any changes that may occur in their personal situation. The information may be provided, among others, through online channels such as Pension 1-2-3 and Mijnpensioenoverzicht.nl
Pension benefits self-employed professionals
Self-employed professionals are entitled to AOW. However, they must make provision for a supplementary pension themselves. If they are working in an industry with a mandatory pension fund, then they must participate, even as a self-employed professional. For this, they have several options.
Besides life insurance policies and special bank saving accounts, they may want to join one of the voluntary pension funds for self-employed professionals. They will not have to pay any revision interest (penalty) if they, when becoming disabled, decide to receive payment from this voluntary pension early. Also, when applying for social welfare, their accrued pension rights will not be considered capital.
If they had employment before becoming self-employed, they can sometimes voluntarily continue the pension scheme of their former employer. In that case, the pension contribution remains deductible for 10 years.
The retirement reserve (oudedagsreserve) is a percentage of the profit (10,9%) an entrepreneur is permitted to set aside, with the payment of income tax postponed to the moment they withdraw. They are permitted to convert all or part of their retirement reserve into a retirement annuity (oudedagslijfrente). Their annuity premium is then tax deductible. The retirement reserve only applies to a sole proprietorship, company or partnership. However, they must fulfil a number of additional conditions as well.
Pension for director and major shareholder
Are you are the director and major shareholder (DGA) and have you built up pension in your own company? Then you may buy out the pension amount throught a settlement to free up capital built up by yourself.
If you don't want to do this, you can convert the built-up capital into a specific type of annuity called an oudedagsregeling.
Pension after death
In most cases, a partner is entitled to a survivor benefit (nabestaandenpensioen). This is subject to certain conditions. If someone passes away, then their partner receives a part of their pension rights. A partner can be entitled to a benefit under the National Survivor Benefits Act (Algemene Nabestaandenwet, Anw).