Lump Sum from Pension: Tips for Delft Residents
As a resident of Delft, you can take advantage of the lump sum option to withdraw a portion of your accrued pension in one go. This provides extra flexibility at retirement, ideal for local expenses such as renovating a historic home in the city center or paying off debts. The scheme contributes to a more modern pension system and is part of the Future Pensions Act, which is also relevant for Delft residents employed by local employers like TU Delft or the municipality.
What does a lump sum mean for Delft residents?
With a lump sum, you do not receive everything as a monthly pension payment; instead, you can withdraw a one-time amount from your pension pot, up to 10% of the total value. This is available to employees at Delft-based companies or self-employed individuals with an annuity policy. It gives you greater control over your finances at retirement. For example, with a pension of €200,000, you could withdraw up to €20,000 at once—handy for renovating your listed monument in Delft.
This flexibility fits into the reforms of the Dutch pension system. Your pension fund or insurer calculates the amount actuarially, and after withdrawal, your monthly pension decreases because that portion no longer generates returns. For personal advice on how this fits your situation in Delft, contact the Delft Legal Aid Office.
Legal basis of the scheme
The lump sum option is regulated in the Lump Sum, Early Retirement and Pension Increase Act, effective from 1 January 2023. This act amends the Pension Funds Act (Wtp) and the Mandatory Participation in Occupational Pension Scheme Act (Wet Bpf), particularly Article 1, first paragraph, part b, of the Wtp for one-time payments.
The act also complies with the European Directive (EU) 2019/1158 on access to occupational pension schemes. For the linked Early Retirement Scheme (RVU), there is a relaxation in the Act on Excessive Remuneration. Tax-wise, it is handled by the Tax Authorities under the Income Tax Act 2001 (Article 11, paragraph 1, part d). For disputes in the region, approach the District Court of The Hague. The scheme applies to pensions from 1 January 2023, with transitional rules for older pots, and pension funds must offer this option to retiring Delft residents.
Practical examples for Delft residents
Suppose you are 67 and live in Delft-Zuid, with an accrued pension of €300,000. You withdraw €30,000 as a lump sum to pay off your mortgage with the Municipality of Delft, reducing your monthly payment by about €100 but saving on interest and providing immediate funds for local improvements.
Or as a self-employed person in Delft's manufacturing sector with €100,000 in an annuity: at retirement, you withdraw €10,000 at once for a bicycle or renovation. Tax-wise, it falls into Box 1 with a discount, more advantageous than periodic payments only—perfect for Delft's vibrant economy.
Rights and obligations as a Delft pensioner
As a participant, you have the right to request a lump sum from your administrator, in writing via a form. This can be done on your pension date or later upon review (up to five years afterwards), with no minimum but a 10% maximum. Inform your partner about the partner's pension.
Your obligations include notifying your partner and accounting for Box 1 taxes, including a tax credit up to €3,359 (2023). Be mindful of the impact on benefits such as rent allowance via the Municipality of Delft or healthcare allowance, and state pension (AOW) if you do not yet receive it. The administrator will inform you of the consequences, and you can seek free advice from the Delft Legal Aid Office. You decide yourself, but for legal questions, the District Court of The Hague has jurisdiction.
Comparison of pension options for Delft residents
| Option | Advantages | Disadvantages | Application in Delft |
|---|---|---|---|
| Lump sum | Immediate capital for local expenses; tax benefits | Lower monthly payment; taxation | For home renovations or debts in Delft |
| Periodic pension | Stable income; inflation protection | Limited flexibility; no one-time amount | For daily life in the city |
| Pension review | Change afterwards; convert up to 10% | Limited to five years | For changing circumstances in Delft |
Frequently asked questions for Delft residents
Can I withdraw a lump sum if I am already retired in Delft?
Yes, within five years of your pension starting, you can request a review for payments after 1 July 2023. Contact your fund or the Delft Legal Aid Office for guidance.
What are the tax implications?
It falls into Box 1 at your rate, but with a discount up to €3,359 (2023), often more advantageous. Check with the Tax Authorities or local advisors in Delft.
Impact on AOW or benefits in Delft?
It counts as income for benefits that year, possibly reducing entitlement via the Municipality of Delft. No asset impact for AOW, but consult the SVB or Delft Legal Aid Office.