Budget Day (Prince's Day) 2016: proposed adjustments to pensions
Last update: September 26, 2016
On Budget Day, a few fiscal measures were proposed to slightly simplify the pensions administration. Let’s hope that these proposals will be adopted.
Pension commencing date back to 1st of the month
In 2012, the commencing date of the Old Age Pension (AOW) was moved from the 1st of the month to the day the pensionable person was born (the 14th for example). The tax authority assumes that the retirement benefit also commences on the actual date when the participant reaches the pensionable age. However, pension administrators (almost) always use the 1st of the month as the commencing date. This could lead to a fiscally excessive pension, because pension that commences on the 1st of the month is worth slightly more than pension that commences on a later date in the month. To prevent this, a temporary measure had already been introduced to enable pension commencement on the 1st of the month. The proposal is to make this temporary measure permanent.
Work continuation requirement is terminated
Currently, the retirement pension can only be postponed if someone continues working. The proposal is to terminate this work continuation requirement. For participants who receive an Unemployment Insurance Act benefit (WW) or a Work and Income according to Labour Capacity Act benefit (WIA) for example and who still have pension claims with different pension ages (62 and 65 for example), it becomes easier to postpone this pension to the commencing date of the Old Age Pension (AOW).
100% verification terminated
At the regular commencing date, the retirement pension together with the AOW is formally not allowed to be higher than 100% of the income received until then. The same applies to the partner’s pension (70%) and the orphan’s pension (14%). As a result of the fiscal restrictions to the pension accrual of recent years, this had already become almost unattainable in practice. The proposal is to terminate this verification formally as well.
