A) Is It Achievable?
In the past we have often been contacted by international companies located in for example the USA/UK/France/Portugal and who did not have a Permanent Settlement within The Netherlands. They each had the same question:
If we could provide pension consultancy regarding the selection and implementation of a Dutch Corporate Pension Plan for their in Holland working employees. Who often came from other countries and/or were still living in other countries.
If such a collective pension plan is possible depends on the factual and legal constellation. Which has to be looked into in each case. More often than you might expect it turned out to be possible.
B) What Is The Benefit?
The benefits of a Dutch Corporate Pension Plan can be very substantial for the employees:
- The claim is not taxed until retirement age and own contributions are tax deductible;
- Substantial next of kin pension coverages at (very) attractive rates;
- Often a great choice of type of providers and plans to choose from;
- Likewise regarding the kind and amount of claims;
- Fine investment options and linked to the Personal Risk Profile;
- Often there are additional voluntary options possible;
- (Very) low costs per participant;
- Excellent Personal Pension Portal with access to all information;
- High level security as pension claims are under supervision of the respected governmental body Authority Financial Markets (AFM).
The standard procedure means that first we have to check if there is not already an existing legal obligation to participate in an existing pension plan.
If not, then we indeed have the option to look into starting a separate Dutch Corporate Pension Plan for our client abroad.
Based on the requests from our client, we will compare the quotes from the pension providers with the best reputation and products and who are best able to meet the set requirements.
I.e. pension providers can be divided in two categories:
- Insurance companies;
- Premium Pension Institutions called PPI who provide equal service except that they outsource risk coverage. PPI’s are relatively new and can be very attractive.
By means of a quality Employer Pension Memorandum we finally inform our client about the options and what might fit best.
Once the employer has decided which quote and pension provider to choose, we will draft a quality Employee Pension Memorandum which will be explained to the employees in a collective meeting. During which presentation we focus on the essentials and have a lot of patience and a good sence of humor.
Finally we assist HR with the actual implementation including:
- How to communicate the new plan in a legal correct manner towards the existing employees;
- How to include the participation in new employee contracts;
- How to use the employer portal;
- How to make sure possible own contributions are implemented in the correct manner by the wages administration.
If it is possbile it can be highly advisable to have a Dutch Corporate Pension Plan.
G) Alternative: Dutch Private Annuity Per Employee
If it might not be possible, it might be an option for each employee to acquire a Dutch Private Annuity Plan. Which has the following characteristics:
- Lower but still interesting annual tax benefits with the option of tax benefit back service;
- Fine investment options linked to a carefully established Personal Risk Profile;
- Acceptable costs level;
- Fine personal portal;
- Flexibility regarding the voluntary annual premium deposit.
H) Finally: Pension/Annuity Pay-Out Abroad & Double Taxation
- Check if there is an option to shop between pension providers in order to get the highest amount of pay-out;
- Contact the pension/annuity provider in time about his wishes and what kind of pay-out he would like to receive as of when;
- Look into the aspect of double taxation as the income will in general be taxed in his home country as it constitutes Global Income and also At Source in Holland. Looking into the probably existing Double Tax Treaty between both countries will hopefully result in the prevention or mitigation of double taxation.