Lump sum, Early Retirement Scheme (ERS) and leave saving

More and more people want flexibility when it comes their pension. Pensions should therefore better suit their personal needs. Also, partly due to the rise in retirement age and state pension age, the need to find ways to reach the finish line in a healthy manner is increasing. Therefore, as part of the system review, additional measures have been announced or even already entered into force.

First of all, an option is to be added for the start date of the pension. Part of the retirement pension may be drawn as a lump sum. The target date for this to take effect is 1 January 2024, but this could still shift. Furthermore, earlier retirement is to be made possible with the Early Retirement Scheme (ERS). And as a third measure, there will be more scope to save leave, including to enable earlier retirement.

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Saving up leave gives employees the possibility to stop working earlier.

Lump sum
Employees are given the choice to withdraw 10% of their retirement pension in a lump sum at retirement date.
• This is an additional option an employee has with their pension money;
• The target date for this to take effect is 1 January 2024, but this could still shift.

ERS

The ERS allows employees to still take part in an early retirement scheme shortly before their retirement date. For a long time this was only possible with a punitive tax levy, and working longer was desirable.

Under the proposed relaxation, employers will be allowed to offer employees who are less than three years before their state pension age an early retirement scheme;
This is a choice that employer and employee must both agree on;
The aim is to enable sustainable employability of employees;
The relaxation has been agreed for the period 2021 through to 2025.

Saving up leave
To give employees more opportunities to stop working earlier, the number of weeks of tax-free leave saving will be doubled.

As an employer, you can grant extra leave by, for example, rewarding overtime or shift work (partially) with extra leave accrual.
If the employee saves more than 50 weeks of leave, the employer must pay payroll tax directly.
Increasing this limit to 100 weeks gives workers more opportunities to stop working earlier or not work for longer periods in between. This allows an employee to take more control over his or her own career, for example by using the leave for retraining, a sabbatical or early retirement.
The extension of leave saving came into effect from 1 January 2021.

Understanding your pension scheme with the Human Capital Planner (HCP)
With the HCP, we offer you a handy tool that gives you insight into how your workforce is structured. You will find answers to questions like: What is the age distribution of my workforce? How involved are your employees in their pensions? How responsible are the investments within the pension scheme? You can also easily work out scenarios in the HCP based on your retirement ambition. And see how the pension scheme compares to those of your industry peers.

2024-07-04 19:05:18