Corporate Pensions: Disability Coverage

  • A) The Dutch System

    In The Netherlands there are several kind and layers of disability coverages:

    • During the first two years the employer has an obligation to pay-out a certain percentage of the gross annual wages;
    • After that period there might be a governmental coverage topped up by a corporate coverage.
  • B) Costs Versus Pensions

    In The Netherlands many corporate pension plans have a clause called ‘Premium Exemption In Case Of Disability’.

    Which means i.e. that if a participant is sick or disabled for a longer time and for at least 80%, that the pension provider will finance the pension premium. In other words, that the premium costs will not exist for the employer and participant.

    A quite different clause is the Disability Pension Clause. Which means that in case of structural and complete sickness or disability, the employee will receive a gross annual disability pension. Which thus provides income.

  • C) Standard Versus Excedent Coverage

    One of the most important distinctions regarding premium costs is:

    • The ‘General Coverage’ of 70% of maximum annual gross € 55.000,- ;
    • The coverage above that limit (to maximum rounded € 250.000,-) which is called the ‘Excedent Coverage’. Possibly even including an annual indexation as of pay-out, which is a very expensive clause.

    In general one can see that the employer pays the Basic Coverage but not the Excedent Coverage as this coverage can be very expensive.

  • D) Conditions Of Coverage

    Regarding all mentioned coverages, please look into all conditions beforehand as they can be important, technical and demanding.

    A positive aspect of corporate disability coverage is that there is by law no medical testing allowed if the employee directly participates.