Pension gap after legal dismissal at your state pension age: “How do you find out?” – Radar

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Nearly 32,000 people completed our questionnaire about the difference between the state pension and the retirement age. A third (31%) did not know that these two ages could be different. While this can pose a major problem: it could happen that you have to live on state pension alone for a year because your pension has not yet commenced.

There are ways to deal with this. This way you can have your pension paid out early, which, however, has lasting consequences for the amount of the pension benefit: whatever you withdraw earlier will be deducted from your pension pot.

Then you continue working, right? Well, not always…

Working until retirement age also seems to be an option, but this is not necessarily the case: the contract of employees who reach state pension age legally expires. This also applies if they have a permanent contract. Almost half (44%) of respondents were not aware of this.

There are several ways in which a gap can arise in your income. For example, someone said: “Dismissed after 23 years, still 4 years before my state pension age.” Others mention that Covid has caused them to stay at home sooner, and others are opting for early retirement. But many people do not realize that such a gap can also arise due to regulations: a gap between your pension and your AOW benefit.

Double-standard indexing

The fact that the state pension age and the retirement age are gradually moving further apart is because these ages are being indexed: they become higher as life expectancy increases. However, this indexing is done in a different way for both cut-off ages. And so it continues to diverge.

14 percent of respondents have faced such a gap. For some it has been resolved well. For example, several former defense employees indicate that this was arranged before it was arranged: “The unions have ensured that this has been closed 100%.” Others depend on a partner, friends, family or have to find a part-time job in the meantime.

A pilot indicates that he is a victim of the regulations: although he has a valid license and medical certificate, this person has not been allowed to fly since he turned 65. While the state pension only starts at the age of 67:

In the middle of a pension gap

Another 3 percent are currently in the middle of it. For some it is a conscious choice:

“I voluntarily retired early (63 1/2). You only live once. So a pension gap has been taken into account and is not a problem at all.”

Another is falling raw on the roof:

“Pension Horeca switched to payment from age 65 to age 68 without prior notice. Fortunately, I was able to reverse that to age 67.”

Someone who has actually been fired has gone back to work to bridge the time:

“I was fired at the age of 66 and seven months. My pension will only start when I turn 68. I now have a new employment contract and work part-time. This is how I bridge this period.”

Think ahead and arrange

3 percent will face a gap between state pension and retirement age within the next two years, for others it will take even longer. A large group does not think they will have to deal with it, but for many, retirement is also a far-away show. In the broadcast about the difference between the state pension and the retirement age experts recommend that you start building assets around the age of 55 in order to cover a pension gap.

How do you know if you are dealing with a hole?

“How do you find out?”, one respondent asks. We have the retirement ages of several large pension funds are listed for you. Of course, you can always contact your pension fund yourself.

Pension accrual in different ways

Of all respondents, 86 percent are building up or have built up a pension as an employee. Some professional groups have (mandatory) pension funds that self-employed people can or must join, such as physiotherapists, general practitioners, veterinarians, painters and people who work in construction. There are also occupational pension funds in which you can participate voluntarily.

There is also a group of 10 percent that is not building up a pension. And people who build up (additional) pension as self-employed, entrepreneurs or in some other way.

Examples they mention:

• Savings / own funds
• Investing / shares
• Investments in, for example, real estate, gold or crypto
• Annuity (a life insurance policy that allows you to save for later at an advantageous tax rate) / single premium policy (the same, but where you deposit an amount in one go)
• Independently join a pension scheme
• If you were employed by a pension fund, you can sometimes contribute an additional 10 years after your employment ends.
• Through payrolling (where the payroll administration is managed externally; this allows you to build up a pension as a self-employed person just like employed people)

Visit the government’s website for more information about it arranging your pension as a self-employed person. In the broadcast of May 6 more about the gap between state pension and retirement ageand how you can prepare for this.