Can I withdraw a large pension amount in one go? Is that smart?
A teacher wants to travel the world with his camper after his retirement. Will he soon be able to withdraw a large sum of his pension capital in one go?
Picture: Type tank
According to the government plans, anyone who retires in a while can choose to have part of the accrued pension capital paid out at once, up to a maximum of 10 percent. The question is whether it is financially beneficial to withdraw a large part of your accrued pension in one go. And also whether it will go ahead at all.
The amount you withdraw no longer pays off
First the financial side of things. Spending a large amount now logically means that there will be less left for later. Suppose you withdraw 10 percent upon retirement, your annual pension income will decrease by 10 percent. Even a little harder, explains AObpolicy officer Roelf van der Ploeg explains, because there is less to invest. “Even during your retirement, your pension capital is still invested in the stock market, which provides extra returns. The amount you withdraw no longer pays off, so your pension may drop even more than that 10 percent.”
The tax story
Then the tax story. If you have such a large amount transferred to your account at once, you may end up in the highest tax bracket. You then have to pay 73.032 percent on part of your annual income (above €49,5). But even if you do not pass that income limit, you will face a fiscal setback as the plans are now. That has to do with the timing. You must withdraw the 'lump sum' when you enter your pension, while you still fall under the high tax rate for working people that year. It would be much more favorable to only withdraw the amount the following year, when the favorable tax rate for state pensioners comes into effect (19,03 percent on income up to € 38.704). But pension funds don't want that, according to Van der Ploeg. “They say: the benefit is fixed as soon as you retire, we are not going to build in any conditionals. The systems are simply not set up for that.”
Benefit from a low rate
Can't a tax exception be made for this group of people, so that they immediately benefit from the low tax rate in their first year of retirement? Van der Ploeg doesn't see it happening, the Tax Authorities already have too much on their plate. It therefore seems very unlikely to him that the plan will be introduced in the middle of next year. “That is the plan, but the tax problem calls the whole idea into question. A solution must be found for this first.”
So that world trip is not possible? Yes, there is an alternative.