From 2023, it is possible to have up to 10% of your pension paid out in one go on your pension date. This is called the 'lump sum'. Discover here the benefits and risks.
What does the lump sum entail?
With the lump sum, you can withdraw up to 10% of your accrued pension once on a one-time basis when you retire.
Conditions for withdrawal
- Maximum 10% of your old-age pension
- Only possible around your pension date (up to 10 years earlier or later)
- You must apply for this in time with your pension administrator
- Your monthly benefit will be permanently reduced
Pros and cons
| Benefits | Drawbacks |
|---|---|
| Freely disposable amount of money | Always lower monthly pension |
| Option for mortgage repayment | Tax levy on the payout |
| Settling debts | Risk of loss of benefits |
| Financing home improvements | No protection against cash shortage |
Tax on the lump sum
You pay income tax on the lump sum:
- It counts towards your annual income
- You may fall into a higher tax bracket
- Possible effect on benefits
Frequently asked questions about pension payout
Is it possible to withdraw more than 10%?
No, the law stipulates that 10% of your old-age pension is the maximum.
Does the lump sum affect my partner's pension?
Yes, the withdrawal may also reduce the survivors' pension.
Am I required to use the amount for debt repayment?
No, you are free to spend it, but take into account a lower monthly pension.
Legal support in Utrecht
Do you have questions about your pension or the lump sum? For legal advice, you can go to the Juridisch Loket Utrecht at Catharijnesingel 55. For disputes, you can contact the District Court of Midden-Nederland, located at Vrouwe Justitiaplein 1.
Practical questions about the lump sum
How can I apply for the lump sum?
You must arrange this in advance with your pension fund, often via a digital form or in writing. Apply well in advance of your pension date. The fund will assess whether you meet the criteria and calculate the amount to be withdrawn. After approval, you will receive it in one go, but your monthly benefit will be permanently lower.
What if I withdraw the amount in a year with high income?
The amount counts as income and may push you into a higher tax bracket. This means more tax. Check your expected annual income and consider advice from a tax advisor. It may be smarter to withdraw in another year.
Can I use the amount for a luxury trip or purchase?
Yes, the spending is free. Do consider the consequences of a lower pension and whether you have enough reserves for unforeseen costs. It might be wiser to invest in, for example, home insulation.