Due to the increase of the retirement age, there is an increasing need for flexibility in the (earlier) use of the pension. Research shows that older workers feel caught off guard by the accelerated increase in the state pension age and find it difficult to reach this state pension age in good health and while working. This prompted a (temporary) adjustment of the Early Retirement Scheme (RVU) created in 2005.
How was it again? The purpose of the RVU scheme was to prevent employers from (structurally) offering older employees the (financial) opportunity to retire earlier. If the employer provided an employee with one or more (periodic) benefits prior to retirement - with the intention of bridging the period until retirement - a final levy of 52% was levied on the employer. This sought to combat the use of an RVU scheme.
On 12 January 2021, the Senate passed the "Lump sum, RVU and leave savings" Act. This law means that as of 1 January 2021, the RVU scheme will be temporarily relaxed by offering an exemption on severance schemes up to a certain amount. In addition, the law offers more tax leeway on leave savings, making early retirement possible earlier. This article further explains the temporary relaxation of the RVU scheme and the expansion of leave savings.
The Ministry of Social Affairs and Employment, together with the STAR (Labour Foundation), recently published a 'guide' on the RVU scheme. This document discusses the new regulations in detail and provides practical guidance and background on the scheme.
The relaxation of the RVU scheme means that employers are exempted from a 52% RVU levy up to a certain amount (RVU threshold exemption). This relaxation applies for a period of five years (up to and including 2025) and then has a phasing-out period of three years. The run-out period means that an RVU scheme agreed no later than 31 December 2025 can still be paid out in 2026, 2027 and 2028.
The purpose of the RVU threshold exemption is to offer employers room to let older employees, who are no longer sustainably able to continue working until the AOW age, stop working a maximum of 3 years before the AOW age. This will make it more attractive for employers to let employees retire earlier.
To fall under the RVU threshold exemption, the following conditions must be met:
This exemption can be used a maximum of once per employee.
The threshold amount of EUR 1,767 per month will be adjusted annually. The amount of this exemption is linked annually to the gross amount of the net state pension benefit for single persons as applicable on 1 January of the year in which the benefit is paid. As an employer, therefore, note that the threshold amount may vary from year to year.
To calculate the total exemption amount for all benefits, multiply the threshold amount of EUR 1,767 per month by the number of months between the first benefit and reaching the state pension age. The number of months is then rounded up to whole months. An example is given below:
Hans will reach his state pension age on 18 June 2024. He will receive a one-off severance payment (RVU allowance) from his employer on 1 July 2021. The period between receiving severance pay and reaching the state pension age is 35 months and 17 days.
This period may be rounded up to whole months. This makes 36 months eligible for the threshold exemption. The exemption totals: EUR 63,612 (36 * EUR 1,767). If the total severance payment falls within this amount, the employer does not have to pay the RVU levy of 52%.
If a higher amount is paid than the exemption, an RVU levy of 52% will still be charged on the part of the payment exceeding the exemption. Also in case the benefit is paid earlier than 36 months before the state pension age, the RVU levy will be calculated on the exceeding months. Below is an example:
Anna will reach the state pension age on 1 January 2024. On 1 January 2022, she will receive a one-off RVU payment from her employer in the amount of €57,600.
The period between receiving the RVU payment and reaching the state pension age is 24 months. The exemption totals: €42,408 (€1767 times 24 months). On an amount of 15,192 euros (the RVU benefit of 57,600 euros minus the threshold exemption of 42,408 euros), the employer has to pay RVU levy.
In addition to the (partial) exemption from the RVU levy, the law also contains an option to expand the tax space for non-statutory leave. Employees can currently take up to 50 weeks of tax-facilitated holiday leave and compensatory leave. Now, the option is offered to increase this tax limit for employees to 100 weeks. Employees can take the accrued leave at different times during their career. This then provides an opportunity to work less or stop working (with salary) in the years before the state pension age.
The conditions for the RVU threshold exemption are relatively simple on the face of it, but can create complex situations in practice. It is understandable that the changes regarding the RVU scheme and leave savings lead to questions. We would therefore be happy to help you with these.