How do major life events affect my pension?

Life events are significant changes in your personal life or income. They are times that affect your financial situation, such as buying a house or getting married. Divorce, bankruptcy, death, and disability are also life events and affect your retirement income as an entrepreneur.

1. Getting married or entering into a civil partnership

Are you entering into a civil partnership or getting married? You can choose whether to do so in (limited) community of property or with a prenuptial agreement.

Limited community of property

Since 2018, if you did not draw up a prenuptial or partnership agreement beforehand, the limited community of property automatically applies.This means assets and debts that were yours before the marriage or registered partnership remain yours. Half of your pension accrual during marriage or registered partnership belongs to your partner. Conversely, half of your partner's pension accrual belongs to you.

Did you get married before 2018? Then a general community of property applied by default. Existing and future assets belong to you and your partner. Again, half of your pension accrual during marriage or registered partnership belongs to your partner and vice versa.

If you got married in community of property and you want to sign a prenuptial agreement later, you will usually be able to make changes with the help of a notary.

Prenuptial agreement

You can make arrangements in advance about your assets and property and marry on a prenuptial agreement or enter into a partnership on a partnership agreement. You can also make arrangements about pension distribution in advance.

Did you marry in (limited) community of property and do you want to convert this into a prenuptial agreement? In most cases, you can still adjust this. To do so, you need to go to a civil-law notary.

2. Divorce

When you get a divorce, you and your partner separate. But you also have to divide your possessions. The same goes for your personal or joint pension savings.

Did you get married in (limited) community of property? If you get divorced (in Dutch), your partner is entitled to half of all pension savings accrued while you were married. And the same is true the other way around. This is provided for in the Pension Equalisation Act (in Dutch).

If you got married or entered into a civil partnership on or after 1 January 2018, the assets and debts you had before are excluded from the community property.

Did you get married with a prenuptial agreement? In the absence of other agreements on how you wish to divide your pension savings, the Pension Equalisation Act also applies here. Did you make other arrangements about how to divide your pension savings before you got married? If so, they take precedence over the Pension Equalisation Act if you get divorced.

3. Starting your own business

Looking to start a business? Remember that you will be responsible for saving up for retirement yourself, unless your industry has a mandatory pension scheme. You will hold onto the pension you accrued while you were employed. In some cases, your pension fund will allow you to keep paying into your pension scheme with tax benefits for another 10 years. Are you an entrepreneur, but have you not started building up a pension yet? Explore the different types of private pensions. If you cannot figure it out alone, ask a financial adviser for help.

4. Illness or incapacity for work

Anyone can become incapacitated for work. Entrepreneurs who fall ill are not entitled to wage continuation pay because they are not covered by employee insurance. A financial buffer or disability insurance can provide some relief, but many entrepreneurs opt against taking out this type of insurance (Source: Statistics Netherlands) (in Dutch).

If you become incapacitated for work, you can choose to live off your pension savings if your pension scheme allows. If you save money for retirement on a bank account, you are always free to dip into your savings. Alternatively, you can choose to buy out your annuity plan (in Dutch). While you are unfit for work, you can live off your pension. If possible, it is best to replenish whatever you use later.

5. Death

How will your dependents fare after your death? They may be entitled to a benefit, pension, or a life insurance payout. Here are the options.

• Survivor's pension. When a self-employed professional dies, their partner is usually entitled to a survivor’s pension or partner pension. Your partner will receive part of your pension savings. See how much pension you have accrued on Mijnpensioenoverzicht.nl and on nibud.nl and check how high your survivor's pension is.
• Supplementary survivor’s pension (in Dutch). Think about whether you want to accrue a supplementary survivor’s pension. This may give your dependents sufficient income to live on and might mean that they will not have to move to another home after your death.
• Term life insurance (Overlijdensrisicoverzekering). You can also decide to take out term life insurance. This death benefit pays the beneficiaries of the policyholder after the latter’s death. Term life insurance gives your dependents more income to live off. Term life insurance is paid out during a specified period of time.
• National Survivor Benefits Act (Algemene nabestaandenwet). Your dependents may be subject to the National Survivor Benefits Act (ANW). Under this act, widows and widowers with children under the age of 18 can claim basic income benefits. You can do this even if you are incapacitated for work and lose your partner. The amount of this benefit is up to 70% of the net minimum wage. You can only claim this benefit if you meet the criteria.
• Tax-deferred retirement reserve fund. Do you have a tax-deferred retirement reserve fund (FOR)? When you die, you will have to settle the FOR with the Netherlands Tax Administration. The reserve fund will be liquidated and added to your company’s taxable profits. If your business partner plans to continue running the business, this does not apply. They will, however, have to submit a request with the next tax return.

6. Bankruptcy

Whether the curator in bankruptcy or the administrator in a debt restructuring may use the accrued pension money to pay off your debts depends on your legal structure and the type of pension.

Eenmanszaak or VOF

If your eenmanszaak (sole proprietorship) or VOF (general partnership) goes bankrupt, you will usually have to declare personal bankruptcy too. After all, your business assets and private assets are not separate. As a result, your creditors are also entitled to your pension savings. When you retire, you will still be entitled to the state pension (AOW).

BV

Are you a partner in a BV (private limited company)? When the BV goes bankrupt, you do not go personally bankrupt, unless you mismanaged the company.

Annuities

Bank annuities or annuity insurance cannot be claimed in case of bankruptcy or debt restructuring. However, there are conditions attached to this. A certified financial adviser can tell you more about this. Distributions, however, can be seized.

7. Forced to end your business

Ending your business affects your pension accrual. It depends on whether you end with debts or without debts.

Are you ending without debts? Then see what you are left with financially after closing down your business. Investigate whether you can continue building up a pension.

Are you ending with debts? With an eenmanszaak and VOF, you are privately liable. Creditors can seize your pension or benefits. Are you operating in a BV? Then seizure is not possible. If you end up on social assistance (in Dutch), as a self-employed professional without staff you no longer have to use up your pension savings. A recognised financial adviser can tell you more about this.

Have you built up a fiscal old-age reserve (FOR)? When you end your business, the FOR is released. The value is taxed in income tax.