Lump sum, RVU and leave savings act

This law is part of the development of the Pension Agreement and contains 3 measures aimed at giving employees more choice at retirement.

RVU, which stands for "early retirement scheme" and "leave savings" also took effect immediately after the law was passed by the Senate in 2021.

The "lump sum" component has been delayed for administrative reasons, effective date now stands at 1 January 2024. Under this section, everyone will have the right to buy off up to 10% of the accrued retirement pension on the effective date of the pension. The lump sum may be spent freely such as on mortgage repayments, home renovations or just a nice holiday. But beware, there are also conditions, such as:

• The commutation takes place on the effective date of the pension*, except for part-time pension
• After partial commutation, a high/low pension is no longer possible
• The remaining pension must remain above the commutation limit (2023: €594.89)
• If the commutation results in a lower survivor's pension, the partner must give consent
  *A postponement option exists under certain conditions

The right to partial commutation also applies to self-administered pensions (insofar as they have not been converted or commuted) as well as to individual pension products in the third pillar, e.g. annuities. There is then an additional condition, the value in the pension product must then exceed the reserve for small annuities after partial surrender (2023: €4,898).

The right to partial surrender does not apply to the PSO. However, the PSO can be converted into an annuity product in the third pillar and thus one can still use this surrender option.

Also pay attention in case of divorce. Has it already been pronounced? Then it is important to know what has been agreed in the divorce agreement about pension rights. Are the proceedings still ongoing and no agreement has been made about pensions? Then be well informed on this subject about the consequences of these future choices!

In short, there is more flexibility in income after retirement, both for employees and entrepreneurs but be well informed beforehand. A choice once made cannot be reversed and it really has to fit into the financial plan, short- and long-term. More is possible with a sound financial plan than you might think!