Building up a pension as an entrepreneur

Consequences of the new pension act

On 1 July 2023, the Future of Pensions Act (in Dutch) took effect. This law starts with a transition period of several years. During this period, agreements will be made to adjust existing pension schemes. By 2023, the new law already gives self-employed people more opportunities to build up extra pension in a tax-friendly way. On 1 January 2028, existing pension schemes must be adjusted and the law will enter into full effect.

General Old Age Pension (AOW)

Under the General Old Age Pensions Act (AOW), everyone who lives or works in the Netherlands is automatically insured and receives a state pension. You even accrue a state pension under the AOW if you have no income. You start receiving your state pension in the month after you reach the state pension age. The state pension age used to be 65, until it changed on 1 January 2013. It will continue to increase progressively over the years.

State pension age

In 2024, the state pension age will be 67. In 2028, it will be 67 years and 3 months. The retirement age is linked to the average life expectancy.  You can calculate your state pension age at www.svb.nl.

Additional funds

The AOW benefit gives you a basic income once you reach the retirement age. A supplement to the AOW sometimes comes from pension funds you are obliged to join. This is called the second pillar. And of course, you can also arrange your own pension accrual. This is called third-pillar pension accrual.

Mandatory pension funds

Self-employed professionals in certain professions and industries are required to participate in a pension fund. Whether or not you are subject to mandatory participation is based on what your work consists of and the corresponding activity code (SBI code) you are assigned when you are listed in the Business Register. Regularly check if your record is still up to date and update it if necessary. Pension funds use the SBI code to determine if you are required to participate in a fund, but you are responsible for signing up to a pension fund yourself.

• Painting, glazing, and finishing companies
• Natural stone, terrazzo/flooring and plastering and finishing companies
• Pharmacists
• Veterinarians
• Physical therapists
• Midwives
• General practitioners
• Medical specialists
• (junior) notaries
• Maritime pilots
• Stevedores in the Rotterdam Port area

Experiment: pension funds open up to entrepreneurs

As part of the Future Pensions Act, a proposal on pensions for the self-employed (in Dutch) has been submitted to the Senate. Under this proposal, pension funds could start a five-year experiment from 1 July 2023, in which entrepreneurs can voluntarily deposit money into their sector’s pension fund, in order to participate in the same pension scheme as employees from the same sector. There are no entry requirements and there is no mandatory medical examination. 

If the experiment fails, you will not be able to continue to build up a pension with the fund. You can then choose to leave the deposited amount, or request to have it transferred to an annuity account. Naturally, you can continue accruing a pension individually, as under the continuation scheme.

Voluntary pension schemes

Besides the mandatory schemes, you can also build up your own pension. There are various options to do so, supported by a tax exemption.

On 1 July 2023, this exemption for pension accrual in the third pillar was expanded from 13% to 30% of your 'jaarruimte' (maximum annual amount you can save for your pension) with retroactive effect to the beginning of 2023. The maximum income that counts towards calculating your 'jaarruimte' was been increased to €128,810 for 2023. As a result, the maximum annual pension cap is €34,550. For 2024, the maximum income for calculating the annual maximum amount is €137,800, and the maximum annual pension cap is €36,077.

The annual pension cap is the part of your income from last year, over which you do not yet accrue pension in another way. Because you are already accruing AOW, there is a portion of your income that you are not allowed to use for pension accrual. For 2023, this amount (the AOW deductible) is €13,646. In 2024, the amount is €17,545. Do you build up (compulsory) pension with a pension fund? Then you will receive the Factor-A through the annual uniform pension statement (UPO). This Factor-A x 6.27 reduces your annual pension cap.

Have you made use of the Fiscal Retirement Reserve (FOR) in 2022? Then you must reduce the annual allowance for 2023 by the amount you added to the FOR in 2022. After 2022, you cannot add to the FOR. Did you buy annuities or deposit money in a bank savings account in the previous year? Then you have to reduce your annual allowance this year by the amounts deposited last year.

Calculation of annual pension cap

The annual cap is the maximum amount over which you can claim tax deductions when buying a pension product. 

Have you not used (the maximum) 'jaarruimte' in recent years? Then the remainder has become reserve space. Since 1 July 2023, you can still use the reserve space from up to 10 years back tax-free. That used to be up to 7 years back.

Pension for self-employed professionals ZZP

Self-employed professionals can take part in special voluntary schemes to accrue a pension, offered by multiple different pension providers.

Continuation of employee pension scheme

If you start building up a pension as a salaried employee and leave the company, you can sometimes continue accruing a pension under your former employer's pension scheme voluntarily. You will have to pay your full pension contribution yourself. This pension contribution is tax deductible for the first 10 years. You apply for the voluntary continuation within 9 months of ending your employment. For more information, contact your former employer or pension administrator.

Annuity and bank savings

You can also arrange your pension with an annuity insurance or via a blocked bank savings account. Then you pay an amount periodically (e.g. monthly), a premium, or you deposit a lump sum (purchase price) with an insurer or bank. This deposit is deductible up to a certain amount. With the Rekenhulp Lijfrentepremie (Calculation Tool Annuity Premiums, in Dutch) you can calculate the maximum deduction. You do not (yet) pay any income tax or wealth tax on the money you save in an annuity.

With the premiums or the purchase price you build up capital to buy an annuity later on. There are different types of annuities. There are fixed-term annuities, annuities that end at your death and annuities that your dependants will receive when you die. Which annuity is most suitable for you depends on your personal wishes and circumstances. Consult a specialised adviser about this.

The payments from the annuity are taxed in box 1 of the income tax (in Dutch). The insurer or bank will deduct this tax from the payments.

Saving for your pension yourself

You can also save or invest for your pension privately. The capital you accrue is taxed for income tax in box 3 (in Dutch). Part of your capital is tax-free, called the heffingsvrij vermogen in Dutch. If you save money yourself, it is not fixed. You can use it how you want to. 

The tax-free retirement reserve (FOR)

Until 2023, you could set aside part of your profits for a tax-free retirement reserve (FOR, in Dutch). From 2023, you can no longer build up FOR. The FOR reserves you built up previously will continue to exist and will be settled according to the old rules.

Calculating your pension

Want to know how much pension you have accrued so far? Visit Mijnpensioenoverzicht.nl to check the current status of your state pension and any pension you accrued with former employers. You need a DigiD to sign in. This website retrieves information from almost all pension funds, but does not show any information about the pension you accrue as a self-employed professional (unless you are required to participate in a pension fund).

Making ends meet?

Whether you will be able to make ends meet after retirement depends just as much on your needs, wishes, and plans as on how much you have saved. Nibud’s roadmap (in Dutch) is a useful tool that you can use to calculate how much to put aside now to be ready for the future.

Key considerations

Your life is full of events that may affect your pension and your retirement. The Dutch government initiative Wijzer in geldzaken (Money Wise) has created its Later goed geregeld tool (Affairs in order, in Dutch) to provide personalised tips tailored to your life.

What about pension for your employees?

Most employers offer a pension scheme to their employees. This is also compulsory for about 70 per cent of companies. This is due to a general binding declaration (AVV) of a sector-wide pension scheme or a provision in the collective labour agreement (CAO). Are you not obliged to offer your employees a pension scheme? Then you can opt for one as part of the fringe benefits.

KVK Insurance Check

With insurance, you can buy coverage for certain risks that you will have to deal with as an entrepreneur. Use the KVK Insurance Check to see what insurance you need.