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A] Why?
For some companies, especially companies who are located abroad and only have a few employees in The Netherlands, it is not desirable to have a Dutch Corporate Pension Plan. Or due to their specific situation, it is not possible to get such a plan. As they often still wish to provide a correct coverage to their employees, instead of a formal pension claim it might be an option to provide for an additional wages compensation so that each employee can acquire his own Dutch Private Pension Plan. We can advise the company and employees about all financial/tax aspects and how to formalize such a claim so that all employees are treated equally.
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B] Coverage
Old Age Coverage
Each year the employee can use the compensation he receives from the company to invest into the plan. These premiums are invested until pension age and then used to buy an annuity.
Therefore it is relevant that the chosen investment funds are excellent and according to the Personal Risk Profile and checked every few years. The Personal Risk Profile we carefully establish using our own 5 page form.
Next Of Kin Coverage
Corporate Pension Plans often have a guaranteed Next of Kin Coverage. The Dutch Private Pension Plan does not have such an elaborate coverage, it will only pay-out the existing capital to the next of kin.
If desired, it is of course possible to complete the Dutch Private Pension Plan with a separate risk coverage being a life insurance. Due to the extremely low interest rates, these premiums are not high. Both coverages together can provide a fine alternative for the Corporate Pension Claim.
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C] Tax
Each Dutch tax resident is entitled to annually invest maximum € 13.236,- in a Dutch Private Pension Plan which premium is income tax deductible.
The exact annual personal amount is related to the amount of gross wages in the previous year and if there was already an Occupational Pension Claim.
To the extent that these benefits have not been completely used during the last 7 years, an extra annual tax deductible premium of maximum € 7.489,- can be deposited into the plan.
Besides the mentioned Dutch income tax deduction benefit, another tax benefit is that the capital within a Dutch Private Pension Plan is exempted from Dutch box 3 wealth taxation.
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D] Costs
Due to the fierce competition between pension providers, the costs of Dutch Private Pension Plans are very low.
As they should be as they are i.e. a tax facilitated investment account.
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E] Pay-Out
The total of deposited premiums plus the total return on investment will be used to provide a pay-out as of retirement age during at least 5 years.
Lump Sums or Flexi Draw Down are not (yet) possible.
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F] Shop At Retirement Age
At retirement age you have the right to contact a number of insurance companies and request their quotes in order to select the best and highest pay-out offer.
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G] International Pay-Out
Wherever you live, it is no problem to get the pay-out from The Netherlands as of retirement age.
If you live in another country, that country will probably tax your global income. Then you request a Dutch tax exemption in order to prevent double taxation.
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H] Our Proposition
We will gladly assist you in getting the best Dutch Private Pension Plan for a one time fixed fee of € 615,- and no VAT per employee.
This includes the following services:
- Carefully establishing your Personal Risk Profile;
- Selection and comparison of quotes;
- Making all the required tax calculations for maximum tax benefits;
- Providing a quality English Pension Memorandum of 9 pages which will include all facts, your wishes, all options and our recommendations;
- Complete implementation;
- Aftercare is included and gladly offered.
