Switching from salaried employment to self-employment? Consider your pension

How do you build up a pension in the Netherlands?

The Dutch pension system is made up of 3 elements, the pensioenpijlers (pension pillars, in Dutch). You can save up money for retirement in each of these pillars separately. How you save up depends on your situation. The 3 pillars are:

1. The state pension (AOW), is a minimum basic pension that everyone gets. The state pension amount depends on how many years you lived or worked in the Netherlands.
2. Pension accrual in salaried employment through an employer. Or compulsory accrual if you are self-employed. For some occupational groups, there is a compulsory sectoral pension scheme or occupational pension scheme. This does not apply to all self-employed people.
3. Supplementary private pensions. You are responsible for your private pensions yourself.

On mijnpensioenoverzicht.nl you can see how much AOW and pension you have already accrued with employers.

Calculate your pension savings

In the Netherlands, you are unable to accrue a pension on the first part of your income. This is the AOW deductible (in Dutch). After reaching your retirement age, you will receive AOW on this part.

The remainder of your income is called the contribution base (premiegrondslag). This is used to calculate the annual margin. The annual margin is the amount over which you can accrue pension with a tax exemption.

You can find out how to calculate the annual allowance in the article Building up a pension as an entrepreneur. Have you built up little or no pension through an employer? If so, your annual allowance is often higher, allowing you to build up more pension in a tax-efficient manner.

Do you have a pension deficit?

A pension deficit (pensioengat) is a financial shortfall when you retire. It means that you accrued less pension than you could have. In practice, you have a pension deficit if your pension amounts to less than 70% of your most recent salary. Check if you may have a pension deficit (in Dutch).

You are allowed to supplement a pension deficit up to a certain maximum amount every year. You can do so by depositing money into a bank account or by taking out a pension insurance contract like an annuity. The amount you deposit into your account is tax-deductible. As a result, this is a particularly tax-efficient way to save money. The maximum amount you can deposit and deduct from income tax each year is called your maximum annual tax relief (jaarruimte, in Dutch). You only pay tax on the money you save above this amount.

Pensions and switching between self-employment and salaried employment

What happens to your pension accrual if you switch from salaried employment to self-employment, or vice versa? And how does pension accrual work if you are self-employed as well as being in salaried employment? Find out what you need to keep in mind in your particular situation:

Situation 1: From salaried employment to self-employment

• Salaried employees are often enrolled in a pension fund. You cannot access the pension you have accrued until you retire, even if you become a self-employed professional. As a zzp’er, you have to take your own measures to build up a pension. You can read more about this in the article Building up a pension as an entrpreneur. You will also find a list of the professions for which a compulsory sectoral pension scheme or occupational pension scheme applies.
• Check if the pension scheme has a survivor's pension for when you die. Married and registered partners are automatically entitled to a survivor's pension if it is in the scheme. Do you live together? Then you have to register your partner with the pension fund yourself. Otherwise, your partner may miss out on all or part of your pension. Entitlement to a survivor's pension may end if you leave salariedemployment. You can check this with your pension fund. 
• Visit mijnpensionoverzicht.nl to check your accrued pension and state pension.

Situation 2: In employment and running a business

• Are you employed and self-employed at the same time? If so, you will almost always accrue pension through your employer with a pension fund. This pension accrual is based on your (part-time) salary.
• Check whether the pension scheme includes a survivor’s pension in the event of your death. Your spouse or registered partner is entitled to a survivor’s pension if this is included in the scheme. Do you live together? If so, you must register your partner with the pension fund yourself. Otherwise, your partner may miss out on (part of) your pension.
• As a self-employed person, you usually decide for yourself whether to accrue pension on your business income. You can do this, for example, by saving with a bank or taking out an annuity. For tax deduction purposes, the Tax Administration adds together your pension accrual from employment and as a self-employed person.

What happens to the the Fiscal old-age reserve (FOR)?

Were you using the fiscal retirement reserve (FOR, in Dutch) until 2023? The FOR is a still untaxed amount on your business's balance sheet. You can buy an annuity or other insurance product and reduce the FOR by its value. But you do have to have the money for this. You can also leave the FOR in place. Is there still a FOR when your business ends? Then you have to pay income tax on that amount.

Situation 3: From self-employment to salaried employment

When you stop being an entrepreneur and start working as an employee, you usually start building up a pension through your employer. This is a second-pillar pension. You can continue to accrue pension with a current private pension provision or savings product according to the rules of the pension product. Check whether your total accrual stays within the tax exemption. Anything above that is non-deductible. Get help from an independent financial adviser (in Dutch) or pension consultant (in Dutch) if necessary. Important considerations:

What happens to an annuity?

Do you have an annuity? You are not allowed to convert annuities into a workplace pension. You are, however, allowed to buy out your annuity up to a certain amount (in Dutch). Have you accrued more than the maximum amount? Here is what you can do:

• Stop funding your annuity. The annuity remains, but you stop depositing contributions. The annuity will continue to grow with interest until you retire.
• You continue funding your annuity. The tax benefits you had as a zzp’er no longer apply.

What happens to private savings

Did you save money in a locked or open savings account? If so, you may have to pay taxes in Box 1 or Box 3:

• With a locked savings account, you cannot access your money during the agreed term. You cannot withdraw any funds, but you can deposit money. The money you deposit into the bank account is tax-deductible. The balance in your locked account is exempt from tax. When it is disbursed, you pay taxes on it in Box 1.
• Do you have an open savings account? If so, you can withdraw money from the account whenever you want. The Tax Admiinistration will add the balance in your open account to your Box 3 assets. This is the part of your income that you pay taxes on.

What happens to the the Fiscal old-age reserve (FOR)?

Were you using the fiscal retirement reserve (FOR) until 2023? The FOR is a still untaxed amount on your business's balance sheet. You can buy an annuity or other insurance product and reduce the FOR by its value. But you do have to have the money for this. You can also leave the FOR in place. Is there still a FOR when your business ends? Then you have to pay income tax on that amount.

More information

For more information about pensions in the Netherlands, visit the websites of Nibud (in Dutch) and Wijzer in geldzaken (in Dutch).