Employee Benefits Update

by Alexander Beard, on Apr 18, 2017 10:12:13 AM

Pension

Increase state pension age

The State Benefit is paid out to all citizens in the Netherlands. The total amount received depends on the number of years lived in the Netherlands and whether the person is single or living together with a partner. As per January 2013 the retirement age for the state pension (AOW) has increased and will continue to be increased in future years. In addition, the age threshold for all other social benefits has increased to the same level as the new AOW age.

The threshold has changed from 65 to 65 years and 9 months effective from 01-01-2017. Per 2022 this will be 67 years and 3 months.

Increase pension age corporate pension plans

The pensionable age for corporate pension plans will change to 68 years per 01-01-2018.

All pension plans need to be adjusted to this new age before 31-12-2017

Changed decree Defined Contribution schemes

On 20 January 2017 an amended Decree contribution scales was published, containing the updated tax friendly allowed contribution scales. These contribution rates apply to defined contribution schemes per 01-01-2017.

Most important changes

The contribution scales are based on more recent mortality figures. As a result, (slightly) higher contributions can be invested.

Below you can find the contribution scales mot commonly used by our clients.

These scales targets an accrual of old age pension and spouse’s pension in case of death on or after the retirement age.

Age band 3% interest rate

2017

3% interest rate

2017

4% interest rate 2017 4% interest rate 2016
15-19 7,3% 7,2% 4,1% 4,1%
20-24 8,1% 8,0% 4,7% 4,4%
25-29 9,4% 9,3% 5,7% 5,7%
30-34 10,9% 10,8% 7,0% 6,9%
35-39 12,7% 12,5% 8,5% 8,4%
40-44 14,8% 14,6% 10,4% 10,2%
45-49 17,2% 17,0% 12,7% 12,5%
50-54 20,1% 19,8% 15,5% 15,4%
55-59 23,6% 23,3% 19,1% 18,9%
60-64 28,0% 27,7% 23,8% 23,6%
65-66 31,8% 31,5% 27,9% 27,7%

 

The new percentages are lightly higher than the 2016 figures.

Aside from the 3% or 4% interest rates, provider are now also allowed to use an interest rate of 2% or 2,5% , which results in higher contributions.

Disability

Transition compensation at full disability (Transitievergoeding bij volledige arbeidsongeschiktheid)

The Dutch Dismissal Law requires employer to pay a mandatory transition compensation to an employee who’s labour agreement is terminated after 24 months by the employer.

If the termination is done based on the fact that the employee is entitled to a long term disability benefit from the stat, this is considered as unfair. The employer has already paid the salary for 104 weeks, and there is no transition to another job.

For this reason the Dutch Dismissal Law will be changed. When this change is final the employer can get the paid mandatory transition compensation back from the UWV. This can be done retrospectively per 01-07-2015!

Other

The Working Conditions Act (Arbowet) Changes in the Working Conditions Act are expected to come into force per 01-07-2017. Major changes are related to company doctor visits, minimum requirement to the contract with the occupational health and safety service and work council rights in relation to approval in relation to the person to be chosen to act as occupational health and safety officer.

Click here to read this article in Dutch.

Bram Bogaard
Managing Director: Europe - AB International Benefits B.V.

Topics:EmployeesPensions