Building up a pension

Most entrepreneurs do not automatically build up a pension. To make sure that you can enjoy your retirement without any financial worries, you will have to make certain arrangements yourself. What are your retirement options?

Under the General Old Age Pensions Act (AOW), everyone who lives or works in the Netherlands is automatically insured and receives a state pension. You even accrue a state pension under the AOW if you have no income. You start receiving your state pension in the month after you reach the state pension age. The state pension age used to be 65, until it changed on 1 January 2013. 

State pension age

In 2023, the state pension age is 66 years and 10 months. Starting from 2024, the retirement age will be 67. After that, the retirement age will be linked to average life expectancy.  You can calculate your state pension age at www.svb.nl.

Additional funds

The state pension benefit gives you a basic income once you reach the state pension age. In some cases, this benefit is supplemented by pension funds that you are required to participate in, but you can also arrange your own pension.

Video: Pension, mastering business risks

This video explains pension if you are an entrepreneur. How should you arrange pension accrual and when do you start? For English subtitles, click the settings wheel, click 'ondertiteling' and select English

Mandatory pension funds

Self-employed professionals in certain professions and industries are required to participate in a pension fund. Whether or not you are subject to mandatory participation is based on what your work consists of and the corresponding activity code (SBI code) you are assigned when you are listed in the Business Register. Regularly check whether your record is still up to date and update it if necessary. Pension funds use the SBI code to determine whether you are required to participate in a fund, but you are responsible for signing up to a pension fund yourself.

• Painting, glazing, and finishing companies
• Natural stone, terrazzo/flooring and plastering and finishing companies
• Pharmacists
• Veterinarians
• Physical therapists
• Midwives
• General practitioners
• Medical specialists
• (junior) notaries
• Maritime pilots
• Stevedores in the Rotterdam Port area

Experiment: pension funds opened up to entrepreneurs

As part of the Future Pensions Act, a proposal on pensions for the self-employed (in Dutch) has been submitted to the Senate. Under this proposal, pension funds can start a five-year experiment in which entrepreneurs can voluntarily deposit money into their sector’s pension fund, in order to participate in the same pension scheme as employees from the same sector. There are no entry requirements and there is no mandatory medical examination. 

If the experiment fails, you will not be able to continue to build up a pension with the fund. You can then choose to leave the deposited amount, or request to have it transferred to an annuity account. Naturally, you can continue accruing a pension individually, as under the continuation scheme. It is not yet known when this experiment will start.

Pension for self-employed professionals

Self-employed professionals can take part in special voluntary schemes to accrue a pension, offered by multiple different pension providers.

Continuation of employee pension scheme

If you start building up a pension as a salaried employee and leave the company, you can sometimes continue accruing a pension under your former employer's pension scheme voluntarily. You will have to pay your full pension contribution yourself. This pension contribution is tax deductible for the first 10 years. You apply for the voluntary continuation within 9 months of ending your employment. For more information, contact your former employer or pension administrator.

Annuity and blocked bank savings account

You can also arrange your pension with an annuity insurance or through a blocked bank savings account. Then you pay an amount (premium) periodically (for example, per month) or you deposit a lump sum (single premium) with an insurer or a bank. A part of these premiums or lump sum is tax-deductible. You can use the Rekenhulp Lijfrentepremie (Annuity Premium Calculator, in Dutch) to determine your maximum tax-deductible premium. You do not have to pay income tax or capital tax on money saved in an annuity (yet). 

With the premiums or the lump sum, you build up capital to buy an annuity later. There are different types of annuities, including fixed-term annuities, annuities that end at your death and annuities that your dependents receive when you die. Which annuity is best for you depends on your personal needs and circumstances, and it can be worthwhile to discuss this with a specialist adviser. 

Annuity payments are taxed in income tax box 1 (in Dutch). Your insurer, bank, or investment firm will deduct tax from the payments they make to you.

Saving for retirement yourself

You can also save and invest for retirement privately. The assets you accumulate are taxed in income tax box 3. Some of your assets are tax-exempt, this is known as your tax-free allowance (heffingsvrij vermogen, in Dutch). If you save for retirement yourself, your money is not blocked, so you can use it as you see fit.

The Tax-deferred retirement reserve fund (FOR)

From 2023 you can no longer build up a fiscal retirement reserve (in Dutch: 'fiscale oudedagsreserve', FOR). The previously accrued FOR reserves will remain and will be settled according to the old rules. Read the article No more FOR, what can I do? to find out what to do with the reserve you have built up.

Calculating your pension

Want to know how much pension you have accrued so far? Visit Mijnpensioenoverzicht.nl to check the current status of your state pension and any pension you accrued with former employers. You need a DigiD to sign in. This website retrieves information from almost all pension funds, but does not show any information about the pension you accrue as a self-employed professional (unless you are required to participate in a pension fund).

Making ends meet?

Whether you will be able to make ends meet after retirement depends just as much on your needs, wishes, and plans as on how much you have saved. Nibud’s roadmap (in Dutch) is a useful tool that you can use to calculate how much to put aside now to be ready for the future.

Key considerations

Your life is full of events that may affect your pension and your retirement. The Dutch government initiative Wijzer in geldzaken (Money Wise) has created its Later goed geregeld tool (Affairs in order, in Dutch) to provide personalised tips tailored to your life.

KVK Insurance Check

With insurance, you can buy coverage for certain risks that you will have to deal with as an entrepreneur. Use the KVK Insurance Check (in Dutch) to see what insurance you need.

 

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