The law introducing Voluntary Supplementary Pensions for Employees (VAPW) was published on 27 December 2018. The law comes into force three months after publication, in other words on 27 March 2019. This new regulation makes it possible for an employee to build up a supplementary pension even if the employee still has no, or only a limited, supplementary pension accumulated with their employer. Building it up through the VAPW will be done by applying net retentions against salary. In the article below we will clarify for you the conditions and arrangements for this regulation.
It is the employee who takes the initiative of setting up a pension agreement with a pension institute of their choice so as to start building up a supplementary pension. The policyholder is always the employee and never the employer. It is also solely the employee who decides for themselves whether they wish to build up the supplementary pension within VAPW rules, the level of contributions they wish to pay (within the ceiling of what is permitted), the type of savings product (e.g. branch 21 or branch 23) to select and the pension institute with which they wish to sign up.
In order to define the level of approved contributions, two points must be considered: on the one hand, there is a maximum permitted contribution, and on the other hand, this maximum amount must then be reduced by the rights already built up via the employer’s supplementary pension scheme.
Maximum approved contributions
The contributions to the VAPW are retained by the employer from the employee’s net salary. The employee may not pay an unlimited amount into the VAPW contract. The amount is currently limited to a maximum of 3% of the reference salary, or to a maximum of EUR 1,600 when 3% of the reference salary is less than EUR 1,600.
The reference salary is calculated on the basis of the total gross remuneration, subject to the social security contributions the employee received two years prior to the pension accrual.
Reduction for the employer’s supplementary pension scheme
The pension rights that were built up during the reference period through the employer’s pension scheme also need to be deducted from the total permitted contributions. If 3% of the reference salary or EUR 1,600 (whichever is greater) has already been paid in through the employer (personal and employer contributions), then no further VAPW payments will be possible.
In the table below, you will find an overview of the (para)fiscal charges and deductions on the contributions and payments. We also compare this to pension savings plans. This shows you that pension savings plans are more attractive from a fiscal perspective.
If an employee wishes to make use of the VAPW, the employee must notify the employer at least two months in advance so that the employer can take the necessary steps to organise the retentions from the employee’s net salary. In case of any changes, or when ending the pension contract, the employee mus also observe this two-month notice period. Employees may only notify a maximum of two changes each calendar year.
As an employer, your role is limited to retaining and passing on the contributions to the pension institute, although this does entail a certain administrative workload. However, VAPW is not in fact covered by the Supplementary Pensions Act (WAP), and the employer therefore has no obligations arising from the WAP in this respect (i.e. no formalities on leaving the company, no guaranteed return, etc.).
To reduce the administrative burden, you can opt as an employer to sign a framework agreement with an individual pension institute, under which individual contracts can then be created. There is no obligation on the employer to do so, nor may the employee be required to work within the framework agreement. The employee may choose to use a different pension institute at any time.