As of January 1, 2006, employees in the Netherlands now have the right to participate in a Life Long Scheme or Life Course Plan (Levensloop).
Conditions
Employees may save a maximum of 12% of gross salary per annum to a maximum of 210% of the last earned gross salary. Savings may be used to finance any kind of leave during employment, including: long-term leave to care for next of kin, sabbatical leave, parental leave, educational leave, or other kinds of leave. Taking leave is only possible during employment, however savings may also be used for (partial) early retirement.
Taking leave is not a right and must be agreed between the employee and his or her employer. Exceptions to this rule are parental leave and long-term leave to care for next of kin. Employers must grant permission for these types of leave (for a maximum period of time).
Transitional regulations regarding age
A transitional regulation is applicable to employees who were 51 years or older on December 31, 2005, but younger than age 56. The maximum savings limit of 12% per annum does not apply to this group, thus enabling them to save 210% of their last gross salary in a shorter period of time.
Employees who were age 56 or older before December 31, 2005, may continue to participate in early-withdrawal or pre-pension schemes offered by their employers (younger employees may not do so as of January 1, 2006). If the employer does not offer these schemes, this group may participate in the Life Course Plan and save up to 12% of gross salary per annum.
Loss of tax advantages for VUT and pre-retirement plans
The new Life Course Plan is a consequence of new legislation stating that VUT plans (which were introduced in the 1970s for early withdrawal i.e. not for pensions but as a reserve for early retirement) and pre-retirement plans (which today replace VUT plans by offering a full pension solution as part of the pension plan) will no longer have tax advantages from January 1, 2006. As a result, VUT and pre-pension plans are expected to disappear.
The Life Course Plan does not have a real tax incentive, however it offers some advantage for employees through postponing taxation: savings are made from gross salary, and payouts are taxed.
Life Course Plan can cover early retirement
The new Life Course Plan (Levensloop), is meant for sabbaticals, travelling, family care, etc, but is suitable in practice for covering early retirement.
If employees decide to participate in a Levensloop, they must cease participation in a Spaarloon Regeling plan (bank savings up to a maximum of EUR 613 per annum, tax-free for four years). Employees must choose either the Levensloop or the Spaarloon, and may decide until July 1, 2006.
Levensloop may be a banking product or an insurance product (in which case the plan must include a risk element).
Zwitserleven will be pleased to inform you about its Levensloop plans.
For more information, please visit www.zwitserleven.com
Employees may save a maximum of 12% of gross salary per annum to a maximum of 210% of the last earned gross salary. Savings may be used to finance any kind of leave during employment, including: long-term leave to care for next of kin, sabbatical leave, parental leave, educational leave, or other kinds of leave. Taking leave is only possible during employment, however savings may also be used for (partial) early retirement.
Taking leave is not a right and must be agreed between the employee and his or her employer. Exceptions to this rule are parental leave and long-term leave to care for next of kin. Employers must grant permission for these types of leave (for a maximum period of time).
Transitional regulations regarding age
A transitional regulation is applicable to employees who were 51 years or older on December 31, 2005, but younger than age 56. The maximum savings limit of 12% per annum does not apply to this group, thus enabling them to save 210% of their last gross salary in a shorter period of time.
Employees who were age 56 or older before December 31, 2005, may continue to participate in early-withdrawal or pre-pension schemes offered by their employers (younger employees may not do so as of January 1, 2006). If the employer does not offer these schemes, this group may participate in the Life Course Plan and save up to 12% of gross salary per annum.
Loss of tax advantages for VUT and pre-retirement plans
The new Life Course Plan is a consequence of new legislation stating that VUT plans (which were introduced in the 1970s for early withdrawal i.e. not for pensions but as a reserve for early retirement) and pre-retirement plans (which today replace VUT plans by offering a full pension solution as part of the pension plan) will no longer have tax advantages from January 1, 2006. As a result, VUT and pre-pension plans are expected to disappear.
The Life Course Plan does not have a real tax incentive, however it offers some advantage for employees through postponing taxation: savings are made from gross salary, and payouts are taxed.
Life Course Plan can cover early retirement
The new Life Course Plan (Levensloop), is meant for sabbaticals, travelling, family care, etc, but is suitable in practice for covering early retirement.
If employees decide to participate in a Levensloop, they must cease participation in a Spaarloon Regeling plan (bank savings up to a maximum of EUR 613 per annum, tax-free for four years). Employees must choose either the Levensloop or the Spaarloon, and may decide until July 1, 2006.
Levensloop may be a banking product or an insurance product (in which case the plan must include a risk element).
Zwitserleven will be pleased to inform you about its Levensloop plans.
For more information, please visit www.zwitserleven.com