Pension agreement: old age pension and mandatory disability insurance (AOV)

At the end of 2021, politicians, employers, and employees reached an agreement on the national pension scheme, after years of negotiations. This agreement primarily concerns employees in paid employment. However, it has far-reaching consequences for you as a self-employed professional ('zzp’er') as well. You will be required to take out insurance against disability ('arbeidsongeschiktheidsverzekering', AOV). And there will be rules for voluntary pension arrangements.

The agreement deals with old age pensions, the state pension AOW, and disability. In the current situation, zzp’ers can make their own arrangements. The advantage of this system is that you can make your own choices. Potential disadvantages are that more risks remain uninsured, and that you cannot participate in pension funds.

Under the terms of the new agreement, zzp’ers can become a member of the pension funds in their business sector. But you will also be required to take out insurance against disability. And the general changes to the state pension AOW will apply to you as well.

The pension agreement has been laid down in a legal proposal. The Dutch cabinet wants to implement the new pension act no later than 1 January 2023. There will be a transition period to the new pension system until 1 January 2027. That means that pension companies and the social partners will have 4 years to adapt their pension schemes to the new legislation.

Mandatory AOV for zzp’ers

The most striking news from the new pension agreement is the requirement for self-employed professionals without staff (zzp’ers) to take out disability insurance (AOV). This may take effect as early as 2024. The negotiating parties do not want to burden society with the costs and risks incurred by uninsured persons.

According to the zzp trade union 'FNV Zelfstandigen', now only 1 in 5 zzp’ers takes out AOV. This has to do with the height of the premiums, plus the fact that some insurers exclude certain professionals, for example because they run a higher risk of falling ill or have reached a certain age.

The proposed legislation appoints the Employee Insurance Agency (UWV) as executor of the required insurance. The Tax Administration will levy the premium, which amounts to roughly 8% of the income. The insurance will be dependent on income and pay out a maximum of 70% of the last-earned income, with a maxmimum gross allowance of €1,650. You can take out additional income insurance to a maximum of €30,000.

The insurance will only cover long-term disability, with a standard waiting time of 52 weeks. You can opt to shorten this waiting time to 26 weeks, or lengthen it to 104 weeks. As an alternative to the AOV offered by UWV, you can choose a commercial insurance, but only if it at least matches the provisions of the mandatory insurance.

AOW pension age to go up more slowly

When you reach your pension age, you will receive the state pension AOW. In 2021, the pension age is 66 years and 4 months, just like it was in 2019 and 2020. The state pension age has been going up to match the higher life expectancy. The pension agreement states that the AOW pension age will remain linked to the life expectancy age, but less so. This was a demand of the trade unions.

From 2022 onwards, the AOW age will go up (in Dutch) by 3 months a year, up to 67 in 2024. After that, the AOW age will go up to match the average life expectancy. The pension age will go up by 8 months for every additional average year.

Old age pension: more options

Old age pension is an addition to the state pension AOW. Many self-employed professionals accrue very little or even no old age pension at all.

There is a mandatory pension scheme for only a few sectors and professions, such as house painters.

During the transition period, plans will be outlined to make it possible for zzp’ers to join a pension scheme on a voluntary basis. Making participation mandatory is also being looked into, possibly with the option to opt out.

In the new pension system, the premium no longer depends on your age. On the date you enter into retirement, you have a one-time option to withdraw a maximum of 10% of the pension at once.

Find more information on the website of the Dutch government, (in Dutch). 

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