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© International Group Program
Country Panel Presentation: The Netherlands
2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016
Accountmanager IGP
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This presentation was exclusively prepared for the attendees of the 2016 IGP Regional EMEA Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission.
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Key Topics
Background Information
Country and Company Info &
Background
Social Security
Private Practice
Taxation Administration Legislation
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Background Information Company Info – a.s.r.
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• Major focus on customer requirements, efficiency, robustness and balance sheet optimization
• Strong financial performance in 2015
• Sharp rise in profit
• Robust solvency position
• More information: http://asrnl.com/
Key Figures 2015 2014
Solvency I ratio 305% 285%
Solvency II ratio 185% 170%
Profit € 601 million
€ 423 million
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Background Information
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Country Info Key Figures:
No of residents 17,008,640 May 2016
Economic growth 2.0% 2015
Unemployment 8.1% March 2016
Consumer confident 2 April 2016
Inflation 0.6% March 2016
Source: www.cbs.nl
that The Netherlands: Has more bikes than inhabitants? Is the most densely country in EU? Is the third largest exporter in the world? Has the second best pension system in the
world?
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Key Topics
Background Information
Social Security
Summary of Social Security
Benefits
Private Practice
Taxation Administration Legislation
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Private
Old Age Annuity
Survivor’s Annuity
Private Disability Insurance
Employer –Employee
Retirement Pension
Survivor’s Pension Orphans’ Pension
Group Disability Pension
Government
General Old Age Pension
General Survivor’s Pension
General Disability Pension
Money Savings • Old sock • Saving Accounts • Increased house value
Three Pillar System
Social Security Benefits Summary of Dutch Insurance
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Source: www.netspar.nl
The Three Pillar System in other countries
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Social Insurances
Contribution via wage taxes
• General Social Security Act (ABW)
• Unemployment Insurance (WW) • Disability Insurance (WIA)
• Old Age Pension Act (AOW) • Death Insurance (ANW) • General Act on Exceptional Medical
Expense (AWBZ) • Sickness Benefit (ZW) • Health Insurance (ZVW)
Social Security
Social Facility
Financed by income tax and applicable if income is lower
than minimum wage
National Insurance
All citizen's are entitled to this insurance. It’s paid by
employees.
Employee Insurance
All employees are insured. Financed by employer and
employee
Summary of Social Security Benefits
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Death Age Development over past 65 years
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First floor:
Disability (WIA) - After 104 weeks - Declared disabled for at least 35% - Fully and permanent disabled: 75% of final salary - Otherwise, percentage of minimum wage up to 70% of
final salary (WGA) - More work is rewarded
General Old Age Pension
General Survivor’s Pension
General Disability Pension
Death (ANW) - Surviving partner has to meet the requirements - Benefit reduced if other income sources - € 1,168 gross per month
Retirement (AOW) - Every citizen in The Netherlands - Accrual from 15 year plus 6 months (2016) - Full gross benefit: € 784 (married) or € 1,138 (single)
per month - Current state retirement age: 65 years + 6 months - Gradual increase in retirement age to 67 in 2021
Three Pillar System
Summary of Social Security Benefits
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Disability < 35%
No WIA benefits
Disability ≥ 35% and < 80% or ≥ 80% but not permanent
Disability ≥ 80% & permanent
First 104 weeks of illness/disability: Employer pays up to 100% of maximized final pay in the 1st year and up to 70% in the 2nd year
•Loss-of-income WGA benefit (max 38 months)
•70% (old salary – new salary) (first 2 months: 75%)
WGA follow-up (RLC used < 50%)
p % min. wage
WIA supplement (RLC used > 50%)
70% (old salary – earning capacity*f)
75% of maximized final pay
IVA benefit
Disability Benefits - Overview of the Social Security
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Key Topics
Background Information
Social Security
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation Administration Legislation
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+
Old Age Pension € 784 - € 1,568 Gross per month
Survivor’s Pension € 1,168 Gross per month
Disability Pension € 0 - € 3,200 Gross per month Government
Employer – Employee
Three Pillar System
Pension Scheme
Customary Private Employee Benefits The second floor
Disability coverages
Despite the fact that there is no obligation for the employer to arrange a
benefit for their employees, many employees in the NL has a second-pillar benefit.
Why is that
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What do you kno
1. If you want to set up a new pension scheme in The Netherlands or want to extend or change the current one: hire a certified independent advisor.
2. Start at least one year prior to the adjustment date with your preparations.
Pension Scheme
Customary Private Employee Benefits
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The advisor will investigate if you are obliged to enter the Industry-wide Pension Fund.
Industry-wide Pension Fund:
• Covers almost 80% of the employees
• Still mostly DB schemes
• Possibility to reduce pension annuities
• Employers’ influence/involvement is minimal
Customary Private Employee Benefits Pension Scheme – Pension Funds
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Customary Private Employee Benefits Pension Scheme – Other Pension Providers and Types of Plans
Other Pension Providers and types of plans
DB Conditional
rights
DB Guaranteed
rights
DC Investments
and guaranteed
based
DC Investment
only
Collective DC
Hybrid Pension Basic DB / Excess
DC
Company Pension Fund
X X X X X
Insurance Company
X X X X X
Premium Pension Institution
X
General Pension Fund (2016)
X X X X X
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Customary Private Employee Benefits Pension Schemes – Trends
DB
DC
Pensionfund Insurance Company
100%
40%
90%
Current situation Trend • Low interest rate • Increasing cost DB
Alternatives for DB schemes • DC schemes • Collective DC schemes • DB schemes at a General Pension Fund • Hybrid pension schemes • Current employees DB – new employees
DC
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Minimum offset € 14,657 Final Pay or € 12,953 Average Pay
Maximum salary € 101,519 (2016)
Customary Private Employee Benefits Pension Scheme – Level of Benefits DB schemes:
67 Salary Pension
Pension Base (PB)
Pension
AOW Offset
• Old Age Pension per year PB x percentage (FP: 1.657% , AP 1.857%) • Partner’s Pension 70% of the insured Old Age Pension • Orphans’ Pension 14% of the insured Old Age Pension • Waiver of premium Premium is included in the premium for Old Age,
Partner’s and Orphans’ Pension
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Customary Private Employee Benefits Pension Scheme – Level of Benefits DC schemes
Age Interest rate 4%
Interest rate 3%
15 - 20 4.1% 7.2%
20 - 25 4,7% 8.0%
25 - 30 5,7% 9.3%
30 - 35 6,9% 10.8%
35 - 40 8,4% 12.5%
40 - 45 10,2% 14.6%
45 - 50 12.5% 17.0%
50 - 55 15.4% 19.8%
55 - 60 18.9% 23.3%
60 - 65 23.6% 27.7%
65 - 67 27.7% 31.5%
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Premium = PB x %
Pens
ion
capi
tal
67 21 Age Based on Average Pay 1.875%
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€ 36,936
Customary Private Employee Benefits Disability Benefits
Additional: Claims Prevention & Claims Management like Re-integration programs
1st year 2nd year
€ 80,000
€ 56,000
WGA Gap Extended or
WIA Excess
€ 56,000
WGA Income
WGA Gap Basic Employer
100% 70%
Second Pillar
Short term Disability Long term Disability
First Pillar
WIA Bodem Second Pillar
Maximum WIA Ceiling 2016 € 52,766.36
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The Third Floor:
Insurances in the private sector
Old Age Annuity
Survivor’s Annuity Private Disability Insurance
Retirement Pension
Survivor’s Pension Orphans’ Pension
Waiver of premium, Group Disability Pension
General Old Age Pension
General Survivor’s Pension
General Disability Pension
Money Savings • Old sock • Saving accounts • Increased house value
On retirement age In case of death before retirement
In case of disability before retirement
Customary Private Employee Benefits
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Medical Benefits
Customary Private Employee Benefits
Resident / Employer
Healthcare Insurer
Healthcare Provider (like Hospitals etc)
Government regulation
Medical Benefits are not a part of Employee Benefits
Government - Determines the Basic Healthcare Package
- Pays the income-related contribution to the Healthcare Insurer
- Pays an income-related benefit to residents with low income
Resident - Obliged: Basic Private Health Insurance
- Voluntary: Additional coverage - Premium paid to Insurer plus - Obliged to pay an income-related contribution to Government
Employer Maximum Employers Contribution 2016: 6.75% x € 52,763 = € 3,561.50 Per year per employee
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Retirement Death Disability Health
Individual Bank/Life Insurance
Lump Sum Death Benefit Life Annuities
Individual Disability Insurance
Mandatory Basic Health, voluntary extra coverages
Employer - Employee DB / DC
Survivor’s Pension ANW-gap Pension (Additionally)
WGA-Gap WIA Excess WIA Bodem
Sick-Pay Insurance
Social Security (Government) AOW ANW
WIA (IVA / WGA)
AWBZ
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Summary
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Key Topics
Background Information
Social Security
Private Practice
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration Legislation
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Taxation Employee Benefits
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Employer Contributions • Premium deductible as business expenses
Employee Contributions
• Premium deductible from gross salary
• Pensions in payment are taxable income
Exception: Net pension
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration Legislation
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Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
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Administration of Plans
Not allowed to administrate the plan in your own company
To take into account:
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Independent advisor
Communication
Involve unions/ employees
Start early in the process
Advice
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Key Topics
Background Information
Social Security
Private Practice
Taxation Administration Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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Legislation Update
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Fiscal Maximum 2014 2015
Maximum Pensionable Salary Not applicable € 100,000
Retirement Age Average Pay Final Pay Average Pay Final Pay
67 2.15% 1.90% 1.875% 1.657%
66 1.99% 1.76% 1.735% 1.505%
65 1.84% 1.63% 1.605% 1.394%
Past Years
2016 Introduction of the General Pension Fund (APF)
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Thank you for your attention! Key Topics We Discussed:
Background Information
Country and Company Info &
Background
Social Security
Summary of Social Security
Benefits
Private Practice
Customary Private Employee Benefits:
Type & Level of Benefits / Survey
Data / Plan Design / Benchmarking /
Trends
Taxation
Taxation of benefits (e.g. lump
sum versus pensions) /
Tax treatment of ER and EE
contributions
Administration
Legal requirements re. administration of
benefit plans: actuarial valuations / communications / involvement of
unions/employees
Legislation
Current legislative issues with
significant impact on the funding of the benefit plans / How are employer
and employees affected?
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www.igpinfo.com
Contact Info
Rabia Jagroep
Intermediair Consultant Pension
+31 6 30441451 [email protected]
Jitka Arslan
Intermediair Consultant Pension
+31 6 51504054 [email protected]
www.asr.nl
a.s.r. / De Amersfoortse a.s.r. / De Amersfoortse
www.asr.nl