New pension rules for self-employed people on social assistance benefit

Self-employed people without employees who have average pension savings will not need to eat into their pension capital before they can claim social assistance benefit. The cabinet has agreed to a bill proposed by the State Secretary for Social Affairs and Employment, Jetta Klijnsma, that will exclude accrued pension capital (up to €250,000) from the assessment of a benefit claimant’s assets. The bill is intended to enter into force on 1 January 2016. Municipalities were asked at the end of last year to take this measure into account this year. €41 million has been set aside for this purpose. The new rules will also apply to people who cannot participate in a pension fund and have made their own pension arrangements.

The bill will greatly help self-employed persons without employees to save for a pension. The government believes it is important that people in this category – of whom there are over 800,000 in the Netherlands – are able like other workers to put money aside for their retirement, to avoid being confronted with a substantial drop in income in later life.

People who have become self-employed will be granted more time to decide whether they wish to continue to contribute to their existing pension fund. At present, some pension funds require them to decide within three months. The bill proposes a statutory nine-month period.

The bill will also change certain rules under the Participation Act affecting recipients of social assistance benefit. Income that they earn from employment is offset against their benefit payments, but part of this income may be exempted by municipalities. At present, municipalities may grant this exemption for an uninterrupted period of no more than six months. In order to encourage recipients of social assistance benefit to take up temporary and part-time work, the bill provides that this six-month period may be divided up into several separate, shorter periods.

The cabinet has agreed to send the bill to the Council of State for an advisory opinion. The text of the bill and the Council of State’s advisory opinion will be published when they are submitted to the House of Representatives.