Stop earlier? That does cost something

I am 61 years old and teach full-time at a secondary school. I will continue with that for a few more years, but I am thinking of stopping around the age of 64. What will happen to my pension?

Tekst Lizanne Schipper - Redactie Onderwijsblad - 2 oktober 2023 - Minder dan een minuut om te lezen

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You can receive a pension from the first day of the month in which you turn sixty. So you can certainly stop a few years earlier. But your monthly pension income will be considerably lower than if you continue working until your state pension age. This has several causes.

To start with, you no longer pay a pension premium during that period and you therefore miss out on pension accrual. What really matters is that your accrued pension rights must be spread over several years. From the state pension age, ABP assumes an average life expectancy of eleven years. If you stop three years earlier, the same amount will last you fourteen years according to the calculations.

What means is that your accrued pension rights must be spread over several years

Equity
Furthermore, you will of course not receive a state pension for the few years that you retire early. The ABP offers a bridge, but that money comes from your own pension pot and is therefore also deducted from your later pension income. An example. Suppose you continue to work until your state pension age and your pension amounts to a net € 2.540 per month, excluding state pension. If you stop three years earlier, you will receive € 2.350 monthly, including the Aow bridge. After your state pension age, the monthly amount drops to € 1.770 excluding state pension.

What also plays a role is that you have to pay less tax from your state pension age, because the state pension premium expires. That makes a big difference: you pay 37.149 percent tax on your pension up to € 19,03 instead of 36,93 percent. If you stop earlier, you will still pay the higher rate and your net profit will therefore be a lot less favorable.

If you have quite a bit of equity, it is more beneficial to use it first, says policy officer Roelf van der Ploeg of AOb. “That was not possible in the past, when you had to retire immediately after your working life. That is no longer necessary, you can also live off your savings for a period first. From a tax perspective, this is certainly more favorable. But the average teacher does not have enough equity for this.” In any case, you could consider forgoing the Aow bridge and covering it with your own money.

You may also first live off your savings for a period. From a tax perspective, this is certainly more favorable.

Part-time pension

And could part-time pension be something for you? According to Van der Ploeg, educators make little use of this. “It's a shame,” he thinks. “It's a smart option.” What does it mean? You will work part-time and get some pension to cover one or two days without income. This is possible from the age of sixty. This way you get a much lower amount out of your pension pot than if you stop completely and you continue to accrue pension for the hours you work. Van der Ploeg: “The financial consequences are limited, while the effect on well-being can be enormous.”

Educators make little use of part-time pension. A shame, because it is a smart option

Continue working

Despite this perhaps daunting list of disadvantages, retiring early can be a very good idea. “We should not focus on what it costs,” says Van der Ploeg. “You must be able to afford a lower pension, you must be prepared to pay that price. But continuing to work can also have a price.”

Calculate scenarios

Do you want to stop working earlier or start part-time a few years before your state pension age? On MyABP you can have various scenarios calculated and see exactly what consequences this has for your pension income.

And then?
You will then first receive a non-binding pension proposal. If you go for it, you will receive an award notification from ABP and your pension application will be final.

Part-time pension
If you want to work a few days or half days a week less from the age of 10, you can already bring forward some pension. This can be done in two steps of at least XNUMX percent fewer hours. In the third step you retire completely.

What about the RVU levy?
Here lies another opportunity. Until 2021, employers had to pay the RVU levy of 52 percent if they offered an employee a scheme to retire early. This is no longer necessary if the employee reaches state pension age within three years, up to a monthly benefit of € 1.847. Although it is obvious that employers are less eager to offer such a scheme in times of personnel shortages. The exemption runs until 2025, but is expected to be extended.

De AOb will hold meetings about the ABP Optional Pension in various regions throughout the Netherlands in November. Check the dates and registration in the agenda.