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Photo ANP / Studio Oostrum
Budget Institute Nibud is concerned about a new law that makes it possible to withdraw a large amount of pension in one go.
From 2023, people will be allowed to have a maximum of 10 percent of their supplementary pension paid out immediately around their retirement date, for example to pay off a mortgage, make a home more sustainable or simply supplement their savings. Parliament has already approved this amendment, which is to come into effect on 1 January.
Nibud fears that this will can lead to disappointments, especially for low- and middle-income earners. They may be at the greatest tax disadvantage and risk recovery of fees.
“It seems like a fantastic arrangement,” says Nibud director Arjan Vliegenthart, “but unfortunately it does not work out that way for everyone, according to our calculations.”
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Additional disadvantage
The disadvantage is especially true if these people withdraw the pension amount before they have reached their state pension age, because they are retiring early. Then they will experience additional disadvantage of the loss of allowances in that year.
Vliegenthart: “People who are forced to stop working earlier and who suddenly want to withdraw such a large amount of money from their pension because they would otherwise not be able to make ends meet, get less value for money. It can quickly save 20 percent, which is huge.”
On the other hand, the monthly pension benefit will be lower, if part of it has already been withdrawn. As a result, you may be entitled to higher allowances in later years. But according to Nibud, that is “uncertain and difficult to oversee”.
The budget institute therefore wants the rules to be adjusted: retirees must be able to withdraw a pension amount without this affecting their allowances.
In addition, Nibud advocates ‘accessible independent and expert guidance’ for everyone. Many people find it too expensive to hire a financial advisor. Pension funds or insurers can usually provide an explanation, but not personal advice, because they do not know the personal situation of their participants.
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Free choice
Similar concerns were expressed in the Senate at the beginning of last year. Wouter Koolmees (D66), then Minister of Social Affairs, said that pension funds are obliged to properly inform their participants about the consequences of this new option.
The consequences must also be made clear through test calculations that you can make on the website of the Tax Authorities.
Koolmees emphasized that this is a free choice, which will help some people. “You don’t have to use it,” he said. “If you have made this calculation and it turns out that this entails a very high tax and social security contributions, it is unwise to use it.”