If you change employers the pension accrued with your former employer will stop and you will accrue a new pension with your new employer. Value transfer is the transfer of pension rights accrued with a former employer to the pension scheme of a new employer.
|
In the procedure of value transfer there will not be the pensionable en accrued pension entitlements transferred but the value of accrued entitlements. This goes as follows: The previous pension provider calculates the current or cash value of your pension entitlements. This value will be transferred to the new pension provider. The new pension provider converts the value back to the new pension entitlements, which correspond with the new pension scheme.
|
The aim of value transfer is minimizing pension discontinuity caused for example by the change of employer. Even entitlements from previous employers can be inserted in the new scheme, i.e. not only the entitlements from the last employer! However, value transfer is not worthwhile in every situation as pension schemes can differ considerably.
|
It depends on your age, your employment history, your career expectations and the terms of the old and new pension scheme. Considering the complexity it is advisable to contact KMP, telephone 0172 424244 or e-mail: kmp@koster.nl, before you decide to transfer your pension rights.
Below you find a few rules of thumb:
- Does your new employer offer a final pay or medium pay system? (See “Two sorts of pension schemes” below). In the case of a final pay system, the entitlements grow with future salary increases until the retirement date. Value transfer is then generally worthwhile.
- What are your career expectations? If you expect future career steps -and salary raises- value transfer is advisable if your new employer offers a final pay system.
- Does your former pension scheme — even after possible dismissal — take account of wage and price rises (indexation)? In other words, will your pension entitlements retain the value in the future that they have now? If not, value transfer can be advantageous to you.
- Will the accrued entitlements in your new pension scheme be adapted to wage development? If yes, then value transfer can probably be recommended.
- Does the new scheme have a partner or survivor’s pension and the former one does not? And do you find that important? If yes, consider value transfer.
- Is it possible in the new pension scheme to invest the pension money with guarantees, but not in the former one? Value transfer could be interesting to you if you find guarantees important.
Two sorts of pension schemes
There are in principle two types of pension schemes. The difference between the two schemes plays an important role in value transfer, especially for those who change from one type of pension scheme to the other. Value transfer is sometimes unfavourable; then it is not recommended. In many cases it is advantageous, then value transfer is worthwhile. The difference between the two pension schemes is in the answer to the question: how will the height of the pension that you later receive be determined?
There are two options:
- The salary you earn is determining. This type again knows two variants. Either the last earned salary applies (‘final pay system’) or the average salary over a certain period applies (‘medium pay system’). Both schemes are ‘defined benefit agreements’.
- The yield on the available pension premium is determining. This type is called a defined contribution agreement. An increasing number of pension schemes is of this type.
|
After transition to your new employer value transfer is your legal right. It is necessary that you adhere to the statutory deadline of 6 months. Otherwise you are dependent on the willingness of your previous pension provider as well as your current and previous employer.
Therefore always ask for the value transfer immediately and within than 6 months after the transfer to the new employer or within 6 months after joining the pension scheme. The procedure can still take several months to be completed.
|
You must indicate to your new employer that you are considering transferring your pension from the previous employer. The new employer will report this to the pension provider and the value transfer procedure will be started. Your HR department can provide you with the relevant forms from the pension provider.
|
Value transfer is a procedure that requires diligence. In addition, you are dependent on the willingness and smoothness of the pension providers involved. Experience has shown that value transfer is usually completed within a year to 18 months, but it can also take longer. Below please find the steps that have to be run through during the process of value transfer.
|
Value transfer is a right enshrined in the law since 8 July 1994, as are the rules that apply. All parties involved have to cooperate in the procedure of value transfer, provided you submit the request on time. The statutory deadline is 6 months after the transition to the new employer. Most pension providers also apply these rules to pension entitlements from employments terminated before July 8, 1994.
If you have older pension discontinuities, you can always ask your former pension provider(s) and employer(s) if they are willing to cooperate with value transfer.
Value transfer is legally permitted only for pension entitlements that you have accrued as an employee with an employer. Other pension provisions are not eligible for value transfer, including:
- pension entitlements such as the ‘fiscal old age reserve’, which you have built-up as self-employed or in your own company;
- single premium policies and other individual life insurances, which you have privately insured.
|
KMP and the new pension provider do not charge expenses. However, the previous pension provider may charge a one-time amount for the administrative processing of your request for value transfer. In this case the amount must clearly be stated. If the value transfer is requested after the statutory deadline of 6 month, expenses may be charged by all parties involved.
|
This depends on the situation. There is a distinction between transfer to a country within the European Union and beyond.
Within the EU
Value transfer is possible if it concerns a pension provider, pension fund or insurance company within the EU. It makes no difference whether you are going to work for a Dutch or foreign employer, providing the pension provider is located in the EU. In that case you have the same right to value transfer as in the transition to a Dutch pension provider. The usual conditions for value transfer are applicable. The requirement is also stipulated that the options for buying off after value transfer are not more generous than on the basis of the Pension Act.
Outside the EU
For transfers tot pension providers outside the EU will include the following requirements:
- the foreign institution or insurance company is under the supervision of the government of that country;
- it concerns a foreign institution whose capital is legally separated from the employer or has a special preferential arrangements in favour of persons entitled to a pension.
For a request of value transfer to an institution beyond the EU you must always posses a disposition from the Tax Authorities and a permission of the Nederlandse Bank (DNB). The addresses are given below:
Belastingdienst Particulieren/Ondernemingen Buitenland (Tax Authority)
Werkgroep Loonbelasting
Postbus 4486
6401 CZ HEERLEN
Nederlandsche Bank
Postbus 929
7301 BD APELDOORN
|
|
If you have a question not covered here, please contact KMP, telephone 0172 424244 or e-mail kmp@koster.nl
KOSTER verzekeringen b.v. has attuned its service to the Financial Supervision Act, has a permit from the Financial Markets Authority with number 12007436 and is associated with the Financial Services Complaints Tribunal (Kifid) with number 300.004399.
|
Startpagina