How do major life events affect my pension?

Pension savings and life changes

Life events are significant moments or changes in your life that often have emotional, practical and financial consequences. For example, when you buy a house or get married. The following events affect your retirement income as an entrepreneur:

1. Getting married or entering into a civil partnership

Are you getting married or entering into a civil partnership? If so, your partner may be entitled to a share of the pension you accrue during your relationship. The rules that apply depend on the arrangements you make. You can draw up a prenuptial agreement. If you do not make any arrangements, the limited community of property regime will automatically apply.

Limited community of property

Since 2018, if you did not draw up a prenuptial or partnership agreement beforehand, the limited community of property automatically applies. This means assets and debts that were yours before the marriage or registered partnership remain yours. Half of your pension accrual during marriage or registered partnership belongs to your partner. Conversely, half of your partner's pension accrual belongs to you.

Did you get married before 2018? Then a general community of property applied by default. Existing and future assets belong to you and your partner. Again, half of your pension accrual during marriage or registered partnership belongs to your partner and vice versa.

Prenuptial agreement

You can make arrangements in advance about your assets and property and marry on a prenuptial agreement or enter into a partnership on a partnership agreement. You can also make arrangements about pension distribution in advance.

Did you marry in (limited) community of property and do you want to convert this into a prenuptial agreement? In most cases, you can still adjust this. To do so, you need to go to a civil-law notary.

2. Divorce

Are you getting divorced? If so, you will often need to reach an agreement about the pension accrued during your marriage or civil partnership. The rules that apply depend on your situation and the agreements you have made.

When you get a divorce, you and your partner separate. But you also have to divide your possessions. The same goes for your personal or joint pension savings.

Did you get married in (limited) community of property? If you get divorced (in Dutch), your partner is entitled to half of all pension savings accrued while you were married. And the same is true the other way around. This is provided for in the Pension Equalisation Act (in Dutch).

If you got married or entered into a civil partnership on or after 1 January 2018, the assets and debts you had before are excluded from the community property.

Did you get married with a prenuptial agreement? In the absence of other agreements on how you wish to divide your pension savings, the Pension Equalisation Act also applies here. Did you make other arrangements about how to divide your pension savings before you got married? If so, they take precedence over the Pension Equalisation Act if you get divorced.

3. Starting your own business

Are you becoming self-employed? If so, you will usually no longer automatically accrue a pension through an employer. You are responsible for your own income after you retire.

Looking to start a business? Remember that you will be responsible for saving up for retirement yourself, unless your industry has a mandatory pension scheme. You will hold onto the pension you accrued while you were employed. In some cases, your pension fund will allow you to keep paying into your pension scheme with tax benefits for another 10 years. Are you an entrepreneur, but have you not started building up a pension yet? Explore the different types of private pensions to see what best fits your situation. If you cannot figure it out alone, ask a financial adviser for help.

4. Illness or incapacity for work

What if you become unable to work? In that case, your pension accrual may stop or be reduced. You should therefore check what provisions and insurance cover you have in place.

Anyone can become incapacitated for work. Entrepreneurs who fall ill are not entitled to wage continuation pay because they are not covered by employee insurance. A financial buffer or disability insurance can provide some relief.

If you become incapacitated for work, you can choose to live off your pension savings if your pension scheme allows. If you save money for retirement on a bank account, you are always free to dip into your savings. Alternatively, you can choose to buy out your annuity plan (in Dutch). While you are unfit for work, you can live off your pension. If possible, it is best to replenish whatever you use later.

5. Death

What happens when you die? How will your surviving dependants be financially provided for? They may be entitled to a benefit or a survivor’s pension. Their entitlements depend on your pension scheme and any other arrangements you have put in place. These are the options:

• Survivor's pension. When a self-employed professional dies, their partner is usually entitled to a survivor’s pension or partner pension. Your partner will receive part of your pension savings. See how much pension you have accrued on Mijnpensioenoverzicht.nl and on nibud.nl and check how high your survivor's pension is.
• Supplementary survivor’s pension (in Dutch). Think about whether you want to accrue a supplementary survivor’s pension. This may give your dependents sufficient income to live on and might mean that they will not have to move to another home after your death.
• Term life insurance (Overlijdensrisicoverzekering). You can also decide to take out term life insurance. This death benefit pays the beneficiaries of the policyholder after the latter’s death. Term life insurance gives your dependents more income to live off. Term life insurance is paid out during a specified period of time.
• National Survivor Benefits Act (Algemene nabestaandenwet). Your dependents may be subject to the National Survivor Benefits Act (ANW). Under this act, widows and widowers with children under the age of 18 can claim basic income benefits. You can do this even if you are incapacitated for work and lose your partner. The amount of this benefit is up to 70% of the net minimum wage. You can only claim this benefit if you meet the criteria.
• Tax-deferred retirement reserve fund. Do you have a tax-deferred retirement reserve fund (FOR)? When you die, the next of kin will have to settle the FOR with the Netherlands Tax Administration. The reserve fund will be liquidated and added to your company’s taxable profits. If your business partner plans to continue running the business, this does not apply. They will, however, have to submit a request with the next tax return.

6. Bankruptcy and debt restructuring

Are you facing bankruptcy or debt restructuring? It may be that your accrued pension savings are used to repay your debts. The level of protection you are entitled to depends on your legal structure and the way in which you have arranged your pension.

Eenmanszaak or VOF

If your eenmanszaak (sole proprietorship) or VOF (general partnership) goes bankrupt, you will usually have to declare personal bankruptcy too. After all, your business assets and private assets are not separate. As a result, your creditors are also entitled to your pension savings. When you retire, you will still be entitled to the state pension (AOW).

BV

Are you a partner in a BV (private limited company)? When the BV goes bankrupt, you do not go personally bankrupt, unless you mismanaged the company.

Annuities

Bank annuities or annuity insurance cannot be claimed in case of bankruptcy or debt restructuring. However, there are conditions attached to this. A certified financial adviser can tell you more about this. Distributions, however, can be seized.

7. Ending your business

Are you ending your business? If so, your accrued pension will usually remain in place. It does make a difference whether you stop with or without debts. In any case, make sure you’ll have enough income to live on later on.

• Have you built up a fiscal retirement reserve (FOR)? When you close your business, the FOR is released. You’ll pay income tax on its value. You may wish to purchase an annuity (in Dutch). This allows you to defer immediate taxation.
• Are you ending your business without any debts? If so, work out what you will have left financially after closing your business. Check whether you can continue to build up your pension. Also check if it is necessary to build up more pension.
• Are you ending your business with debts? In the case of an eenmanszaak or a VOF, you are personally liable. Creditors can therefore attach your pension or benefits. Do you run your business as a BV? In that case, attachment is not possible. If you end up on social assistance (in Dutch), as a self-employed professional without staff you will no longer be required to use up your pension savings. A qualified financial adviser can tell you more about this.