Brochure Net Pension Scheme

Transcription

1 Brochure Net Pension Scheme

2 Net Pension Scheme (NPS) Introduction There is a collective pension scheme for all employees, but this scheme only offers pension accrual on a maximum gross annual salary of (2018 accrual limit). A scheme has therefore been introduced alongside the collective scheme,which allows participants to accrue pension on salary above the accrual limit as well; this is called the Net Pension Scheme (NPS). SPF manages the NPS administration on the basis of agreements between the social partners (employer and the unions). You can read more about this new Net Pension Scheme in this brochure. The pension regulations state which salary components make up your pensionable salary. Why the split and how does it work? The majority of your pension contribution is paid by the employer, but you also pay part of it yourself. Your own contribution is deducted every month from your gross salary up to (2018 accrual limit) and is thus not subject to wage tax. You will not pay tax on it until you retire, as the pension benefits are taxed. so the tax is deferred (contributions untaxed. benefits taxed). However, pension contributions on the salary above the accrual limit are not tax deductible. The government levies the full amount of tax on that part of the pension immediately rather than waiting until the pension is paid. However, you can continue to accrue a pension on the salary beyond the limit in the NPS by using the employer s contributions on your net salary to build up capital to buy pension at a later date. The net pension you purchase with this capital will not be taxed when you retire (contributions taxed, benefits untaxed) and the pension capital saved using the net contributions will not be taxed in box 3. Who can join? The NPS offers participants the chance to build up capital on the part of their salary above the accrual limit, which can be used to purchase net pension at a later date. SPF s scheme applies to employees with a gross fixed annual salary above the accrual limit. You will be able to join the NPS from the month in which your salary passes this limit. Anyone who joins the company on a salary in excess of the accrual limit can join the NPS immediately. Eligibility is assessed on the basis of the fulltime salary. If you work part-time, this is taken into account when determining whether your salary is above or below the limit. A person who works 80% of the time and earns a part-time salary of will earn on a full-time basis. That person is therefore eligible to join the NPS on a pro-rata basis for the part of his or her Brochure Net Pension Scheme, version

3 salary above the accrual limit. In this example. that will be on 80% of the salary * ( ) = and disability risks are also insured. If you join the scheme as soon as you join the company or as soon as your salary exceeds the set salary limit, you will be accepted without any further (medical) questions. If the fund were to offer the option to join at a later date, potential participants might decide to join only in the event of increased risk, which could damage the pension fund and thus its members. To avoid this, the social partners have decided not to allow employees to join the NPS at a later stage. Character of the NPS One opportunity to join Membership of the Net pension scheme is not mandatory and you must decide whether or not to join. You have only one opportunity to do so. The scheme has advantages and disadvantages. We advise you to arrange for pension provision on the part of your salary above the accrual limit, as your retirement pension will otherwise be based on your salary up to the limit, as will the partner s and orphan s pension paid in the event of your death. You must consider this carefully as. if you opt out of the scheme, you will not be able to join at a later date. It is also important to consider this if you are already paying taxes abroad or may do so in the future. See the separate paragraph in this brochure for more information. Opting out? If you want to opt out of the scheme you must notify us by returning the completed and signed form at the back of this brochure. If you have a partner, he or she must also sign the form for it to be valid. As mentioned earlier in the introduction of this brochure, the NPS is a pension scheme governed by special legal regulations. One important difference from the basic scheme is that you accrue pension capital in the NPS, whereas in the basic scheme you accrue (conditional) pension entitlements. The pension capital is used to purchase net pension (retirement pension and partner s pension) in due time. The amount of these entitlements depends on the capital available and the rate that applies on purchase. One of the administration requirements for the NPS set by the government is that the capital and net pension in the NPS must be kept strictly separated from those in the collective basic scheme. This is to avoid confusing net and gross money and to ensure transparent fiscal treatment. In its communications, SPF will therefore always distinguish between pension accrued under the collective basic scheme on the salary up to the accrual limit, and the capital or net pension under the NPS scheme. One of the reasons why you cannot join the NPS at a later date is that, if you do, the death Brochure Net Pension Scheme, version

4 Employer s contribution and own contribution Participants in the NPR scheme pay a monthly contribution to the pension fund. This contribution is based on the part of your salary exceeding euros. Contribution consists of various parts: Premium used for capital accrual Risk coverage premiums: - death - disability Contributions have been adapted to the maximum deposits allowed by the tax authorities. These contributions are governed by Tax law and are age-related, which is why they increase with your age. This is connected to the reduced period of time remaining until retirement, during which deposits may be invested. Contributions are paid by both the employer and the employee. The percentage due by the employee has been laid down in your terms of employment, available through your employer. The table below shows premiums due arranged by age category. Premiums listed are deducted from the net salary, and reimbursed by the employer after deduction of the employee's portion. As contributions are deducted from the net salary, the employer s contribution is paid gross on the monthly salary. As we have mentioned earlier, participation in the NPS is not mandatory. If you opt out of the scheme you will still receive the employer s contribution. You will then have a higher net salary in exchange for a lower pension later. The contribution you receive from the employer for NPS participation is intended solely to finance net pension accrual, so it is not part of the annual salary and bears no relation to a bonus or other terms of employment. You could possibly use the employer's contribution to ensure a suitable pension solution. Age categories Capital accrual percentage Death risk percentage Disability risk percentage Expenses coverage surchange Total Accrual 25 tot en met % 0.10% 0.08% 0.17% 5.24% 30 tot en met % 0.20% 0.09% 0.19% 6.08% 35 tot en met % 0.20% 0.10% 0.22% 6.92% 40 tot en met % 0.30% 0.11% 0.25% 7.97% 45 tot en met % 0.40% 0.13% 0.29% 9.23% 50 tot en met % 0.50% 0.15% 0.34% 10.69% 55 tot en met % 0.50% 0.18% 0.40% 12.37% 60 tot en met % 0.40% 0.20% 0.45% 14.15% 65 tot en met % 0.20% 0.23% 0.50% 15.73% Brochure Net Pension Scheme, version

5 What is insured: the risk cover with corresponding premium payments The NPS contributions are invested by SPF in the same way as those in the basic scheme. You can use the net pension capital saved to purchase net pension later. These are entitlements to net retirement pension and net partner s pension. If you do not require a net partner s pension, you can choose to exchange it for a higher net retirement pension by the time you retire. If you have a partner, he or she must agree to this. Death - partner s and orphan s pension If you die before you retire, the scheme also offers cover for a partner s pension. A small part of the NPS contributions (see above table for percentages) is withheld for this risk cover. This provides for a partner s pension benefit based both on the salary up to the accrual limit (covered under the basic scheme) and the salary above. The risk cover on the salary above the accrual limit will provide for a net partner s pension of 1.16% of that salary portion for each year you participate in the NPS, supplemented by the remaining years you could have been participating until your retirement date. Example: An employee (age of 50 years and 3 months) joins the NPS from January 1, His state pension age is 67 and 3 months; his pension salary is 155,075. The cover for net partner s pension under the NPS is calculated as follows: The part of the salary above 105,075 is 50, % of this amount is insured for partner s pension for each year of membership of the NPS, including the years up to retirement. In this case, a total of 17 years: On an annual basis the net partner s pension is: 1.16% * 17 years * 50,000 * (100% %) 4,639. An orphans pension is also insured along with the net partner s pension. This amounts to one fifth of the net partner s pension for each child. If both parents have died, this is doubled. Continued contributions on disability You are also insured for exemption from NPS contributions if you are wholly or partially disabled. The fund then continues to make these contributions to the NPS for you in proportion to your degree of disability, so that you continue to accrue net pension. If you do not join the NPS you will not be covered for any risk for the part of your salary above 105,075. See also the paragraph Opting out of the NPS'. Brochure Net Pension Scheme, version

6 Terminating participation There are several reasons why you might terminate your NPS participation: Reaching your retirement date: the net pension and the gross pension accrued under the basic scheme will be paid to you from that date. SPF will keep the administration of both pensions strictly separated. Leaving the company: upon termination of your employment contract, the saved capital will be converted into net pension entitlements (including partner s and orphan s pension) at the current rates applying. The retirement pension will be paid to you when you retire. The partner s pension will be paid when you die. The risk cover will cease upon leaving the company. Terminating membership at your own request: Participation in the NPS scheme may be discontinued yearly on January 1, provided that the appropriate form has been handed over to the employer at least before December 1. The capital you have saved is used to purchase net pension in the NPS in due time. Note: if you terminate your participation, you will not be able to reenter again later. Death before your retirement date: from that date your partner and/or children will receive a partner s and/or orphan s pension based on the total cover in the basic scheme and the total cover in the NPS. Investing capital and payment of returns SPF will invest the capital created from the net contributions (after deducting the contribution to cover the risk and costs) in the same way as it invests the pension assets for the basic scheme. Put simply, that means the investment portfolio is spread between fixed-income securities and equities (government bonds and shares respectively). The aim of this investment mix is to strike a good balance between the return (capital growth) and the risk. This means that the returns received on the capital are in line with the net returns of the SPF fund. Net means the total returns less the asset management costs. These returns are credited or deducted monthly. The value of the investments fluctuates and so these returns may either be positive or negative. Buying pension entitlements You use the saved capital to purchase entitlements to a net retirement pension and a net partner s pension. These entitlements are made available as net pension benefits after your retirement. If you choose to exchange the net partner s pension for a higher retirement pension, to bring forward or defer your retirement pension, or take a part-time pension or vary the amount of the pension in the basic scheme, these choices will also apply to the net pension. The capital is converted into net pension entitlements at a cost-effective rate. SPF sets this rate each year on the basis of market circumstances. Your saved capital can be converted gradually so that you do not have to convert it all on retirement, when the rate may be unfavorable. In the 10 years before you reach retirement age (currently 67), you can convert part of your saved capital into net pension every year at the rate applying in that year. This does not affect Brochure Net Pension Scheme, version

7 the total cover for partner s pension. SPF will normally convert the capital gradually over this ten-year period, but you can decide on a different arrangement. We will send you information about how to notify us of this. You can find more information about this in the Explanation conversion of Net Pension Entitlements. the Netherlands, so it may be a disadvantage for you to be a member of the NPS. We advise you to contact your tax consultant to find out which solution is best for you. Conditional indexation When entitlements have been bought with the capital, but also when the net pension has started, the fund will endeavor to pay an annual increase on pensions (conditional indexation). The law requires the pension capital for the gross pension to be separated strictly from that intended for the net pension. Each scheme must bear its own costs so that no gross money can find its way into the net money and vice versa. This means that the increases paid (indexation) for the gross basic scheme and for the NPS may differ. Foreign tax liability In the introduction we explained that the contribution for the NPS is paid from the net salary, i.e. after tax, so the pension capital created and subsequent benefits will not be taxed. Although this means that the net pension is treated uniformly under tax rules in the Netherlands, this may not be the case if you have to pay taxes abroad, for example, if you live abroad (as a border worker ) or if you expect to live abroad once you retire. That could also mean that you are liable for wealth tax or capital gains tax on the value of the capital in the NPS in your country of residence, or that you are liable for tax on the pension benefit. The latter amounts to double taxation, as the contribution is deducted from the net salary in Opting out of the NPS The NPS offers you the possibility of continuing to accrue pension on salary above the limit. In addition to a higher pension, membership also provides cover for a partner s pension on this part of your salary if you die before you retire, and for continued accrual of your net pension if you become disabled for work. Participation is voluntary and if you choose to opt out of the scheme, you will retain the pension accrued in the collective basic scheme on the salary up to the accrual limit. The risk cover for dependents pension and non-contributory accrual on disability will also be related to salary up to the accrual limit. The disability pension (a supplementary pension that can be paid under certain circumstances in addition to the state disability benefit) will not be capped at the accrual limit. You can opt out of the scheme by completing the form in this brochure and sending it to HR. Brochure Net Pension Scheme, version

8 You will find the required information in the form. If you decide to opt out of the NPS you will still be eligible for the employer s contribution. As explained above, after terminating your NPS participation, you cannot re-join the scheme at a later date. Brochure Net Pension Scheme, version

9 Temporarily changing your address in My SPF pension If you have forwarded your address to your employer so that SPF can send you digital mail, then you will have to provide a new address if you change employer. If you do not provide a new address, SPF will not be able to send notifications about new mail in your digital mailbox in My SPF Pension on SPF's website. Contact If you have any questions about your pension visit the website: or contact our Pension Desk: tel or info.pensioenfondssabic@dsm.com Regulations Read more about leaving the company in the pension regulations by clicking on the icon. Disclaimer The information provided in this brochure by Stichting Pensioenfonds SABIC, based in Sittard (the pension fund) is general, purely indicative and subject to change. It is intended only to provide members with a general view. The information provided is assumed to be reliable, but is used entirely at the user s risk. Neither the administrator (DSM Pension Services B.V.), nor the pension fund accepts any liability for damage arising from errors or omissions in the information, or for damage arising in connection with the use of, reliance on, or distribution of the information. Rights can be derived only from the pension regulations applying to the member. Brochure Net Pension Scheme, version

10 Application form for opting out of the Net Pension Scheme (NPS) Applicant s details Name and initials: Date of birth: Street address: Post code and city: Administration number SPF / BSN: Date ending participation NPS: I hereby declare that I do not agree to participate (any longer) in the Net Pension Scheme of Stichting Pensioenfonds SABIC. I took notice and I am fully aware of the consequences of this decision. Participant s signature Date: Place: Signature: Partner s signature Note: If you have a partner, his or her signature is also required for the form to be valid. We kindly request to enclose a copy of your partner s ID or passport with the form. Upon termination of your participation in the Net Pension Scheme, your partner will be sent a confirmation. Date: Place: Signature: Please log a ticket for your request via the HR SSRS ticketing system (service request: HR Employee Services support Compensation & Benefits/CLA Netherlands Pension). Please attach a copy of the completed and signed form and any attachment(s) to the SSRS-ticket. version Brochure Net Pension Scheme, version