Regulations at a glance. July 2015 edition

Transcription

1 Regulations at a glance July 2015 edition

2 Disclaimer The information provided in this brochure by Stichting Pensioenfonds DSM Nederland, based in Heerlen (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. For DSM, please also other associated subsidiaries included in Annex 1 of the PDN Pension Regulations. 2

3 Introduction When you start working as a DSM employee in the Netherlands, you are automatically registered as a member of the Dutch pension scheme. Your pension is placed with the Stichting Pensioenfonds DSM Nederland (PDN), a foundation which operates independently of the employer. PDN is responsible for the pensions of all DSM employees in the Netherlands and has its own independent board of trustees. The foundation ensures that DSM employees, former employees and beneficiaries receive the pension they are entitled to. The actual fund administration and communication has been outsourced to DSM Pension Services (DPS). Pension is the future retirement income, but it is definitely not something to worry about later! The financial situation during retirement will depend on the choices you make well before your pension age. By making certain choices in due time, you can match your future pension benefits to personal wishes. When a personal situation or work circumstances like wages, hours, etcetera change, it is also important to consider the implications for the pension as well. This will help to prevent any adverse effects on your pension situation. This brochure gives information you need about the Dutch pension system, your pension entitlements and, the DSM retirement pension, the various options you have and the situations you should be taking action yourself. If you have any questions, please contact one of the organizations or offices listed in chapter 5. The website provides more detailed information about the pension scheme, such as the pension regulations and the options available to you. This brochure has been prepared with the greatest possible care. However, you cannot derive any rights from it. The pension regulations are ultimately decisive. A pension planner is available on the website for employees still accruing pension. Index 1. Pension system: Pensions in the Netherlands 1a. The three pillars 2. Pension at DSM 2a. Pension specifics 2b. Retirement pension 2c. Pension contributions 2d. What to do in case of occupational disability? 2e. Partner s pension 3. Choices and changes of circumstances 3a. Pension choices 3b. Changes in personal situation 3c. Changes in work situation 4. Questions or changes? 4a. Further information 5. Glossary 3

4 1. Pensions in the Netherlands This chapter explains how the pension system is organized in the Netherlands. It contains useful information that will give a better insight into pension entitlements. Chapter 5 includes a list of many frequently used terms you will come across in this brochure. What is a pension? The term 'pension' is in fact an umbrella term for payments which a former employee receives once he reaches the retirement age or becomes occupationally disabled generally on the basis of the build-up of contributions made during a working career. It may also provide an income for surviving dependents should the pension holder die. All working employees in the Netherlands accrue pension entitlements during their active working life. There are three types of pension at DSM: Retirement pension. Dependents pension (partners and children). Disability pension (a supplementation on the legally mandatory Disability Insurance is arranged through PDN). 1a. The three pillars The Dutch pension system is a system which consist of three pillars. Pension entitlements through the government - the General Old Age Pensions Act (AOW), the Surviving Dependents Act (ANW) and the WIA (Work and Income Act). Pension entitlements through the employer (retirement pension, partner s pension and disability pension. Supplementary pensions that consist of a holder's own contributions which are invested over time in pension provisions such as additional pension savings, Net Pension Scheme (NPS), single-premium policies and/or annuities. 4

5 The 1st pillar: (State pension) State pension AOW, ANW or WIA Upon retirement or in case of death the government respectively pays you or your surviving relatives/dependents a basic income. State benefits also apply in the event of occupational disability. Shown below are the different government payments. AOW (General Old Age Pensions Act) The General Old Age Pensions Act is a state social provision that applies to almost everyone who has reached the state pension age. The AOW payment does not depend on the wage earned during your working career, but is rather linked to the net minimum wage. The monthly payment also depends on the insured period (in years), civil status and family situation. For single householders the AOW payment is 70% of the minimum wage. Married couples and couples living together (each) receive 50% of the minimum wage. The benefit is paid monthly, until the person entitled to the payment passes away. ANW (Surviving Dependents Act) In case of death your (surviving) partner in marriage, registered partner or partner living together with you and/or your children will receive an ANW payment. The right to this payment is subject to the following conditions: the deceased has children under the age of 18. Payments continue until the youngest child reaches the age of 18, or until the child belongs to a different household; the surviving relative is occupationally disabled at least 45%; in case the surviving relative was born before 1 January The ANW is subject to an income test and the benefit is cut if the (surviving) relative (already) has an income higher than the applicable threshold. WIA In case of occupational disability the ensured (former employee) is entitled to receive benefits based on the level of occupational disability under the WIA (Work and Income Ability to Work Act). 5

6 The Social Insurance Bank (Sociale Verzekeringsbank or SVB) is responsible for the AOW and ANW payments. The Employee Insurance Schemes Implementing Body (UWV) is responsible for the WIA. Six months prior to your state pension date the SVB will send you an application form for the (state) AOW benefit. The 2nd pillar: (Pension through the employer) During employment you (also) build up pension through your employer(s). The employer will pay the largest part of the premium while you pay the other part. If you change jobs, you can transfer the pension entitlements you have built up with PDN to the pension administrator of the new pension fund. This is called value transfer. The 3rd pillar: (Supplementary pension, individual) In addition to the AOW and the pension accrued through the employer, you can save for additional pension on your own account. This will help increase your pension. One option is to pay voluntary additional pension contribution to the pension fund, e.g. under the NPS scheme, for salaries above EUR 100,000. Another option is to accrue additional pension privately independent of any arrangements offered by your employer - for instance by taking out a life insurance policy or gathering capital in another way. 6

7 2. Pension at PDN Chapter 1 shows that pensions in the Netherlands consist of three pillars, but what does the pension scheme at PDN look like? And what exactly will your pension be at the pensionable age? This chapter elucidates the pension scheme, pension, pension contributions, conditional indexation, choices available and coverage in case of occupational disability or in the event of death. Please visit the website for the full text concerning the pension scheme in the Regulations part. Conditional average salary scheme The PDN pension scheme is a conditional average salary scheme. Each year the amount of pension you accrue depends on the pensionable salary in that particular year. To fund these accruals, DSM pays an agreed pension premium to PDN. This premium is based on the level of the (pensionable) salary. The accrual of pensions on an annual basis is conditional. This means that accruals are maximized to a pensionable income of 100,000 EURO. Furthermore, as there is a so-called fixed premium agreement with the employer to cover the accrual of pension entitlements, the level of premiums has to be sufficient. In case of insufficiency the accrual might be shortened. The fixed premium consists of a premium level of 25.5% of the pensionable salary maximized to 100,000 EURO. Next to this also indexation is conditional. If PDN does not have sufficient financial means in a particular year, it will not be possible to index pension entitlements and index existing pensions. In those circumstance the Board will make relevant decisions. Part-time working If you work part-time for all or part of your career, you will build up less pension for that part. Hence, the retirement pension you can obtain when you work part-time will be lower than when you work on a full-time basis. 7

8 How will your pension remain fully indexed? The cost of living is rising steadily. This means that the purchasing power of pensions will be eroded if pensions are not adjusted in due time. The following applies to active members: PDN tries to increase the accrued pension every year in line with salary increases at DSM. The fund pays this increase (indexation) from the returns on its investments. This implies that pension accruals are not automatically entitled to these increases. They are only possible if the returns on investments are high enough and furthermore if the financial condition of the pension fund allows it. If an increase is not possible in a given year, the Board may decide to make up the shortfall in a subsequent year. The following applies to pensioners and pre-pensioners: PDN tries to index the pension of pensioners and pre-pensioners every year in line with price increases. The fund pays this increase (indexation) from the returns on its investments like it does for active members. The level of the increase is based on the Consumer Price Index for all households, Derived ( CPI alle huishoudens, afgeleid ), an index published by Statistics Bureau Netherlands (CBS). If an increase is not possible in a given year, the Board may decide to make up the shortfall in a subsequent year. The following applies to former members (deferred members): PDN tries to increase the pension of former members every year in line with price increases. The fund pays this increase (indexation) from the returns on its investments. Just like it does by active and other members. The level of the increase is based on the Consumer Price Index for all households, Derived ( CPI alle huishoudens, afgeleid ), an index published by Statistics Bureau Netherlands (CBS). If an increase is not possible in a given year, the Board may decide to make up the shortfall in a subsequent year. The PDN Board decides every year whether the fund's financial condition is solid to follow salary increases (for active members) or prices (for pre-pensioners or deferred members). If the fund's financial condition is solid and in line with regulations indexation will be granted. The fund is obliged to inform you about indexation: For pension beneficiaries: Your pension fund each year tries to increase your pension in line with price increases. Your pension fund pays the future increases in your pension from the returns on its investments. This increase and the expectations for the coming years do not automatically result in entitlements to future increases. For active members: Your pension fund each year tries to increase your pension in line with pay increases. Your pension fund pays the future increases in your pension from the returns on its investments. This increase and the expectations for the coming years do not automatically result in entitlements to future increases. 8

9 Risks Indexation For indexation to be granted the fund s financial situation must be solid. Each year the Board assesses whether this is the case. (Partial) indexation should not result in the funding level dropping below the legally required limit. In case of not granting one or more indexations, this lagging behind might be recovered as soon as the fund s financial situation will be solid again. Pension accrual reductions The pension premium is a fixed premium. Employer and employees (social partners) made an arrangement on the level of this premium. The premium level has the comply to legal and funds conditions. Although in essence the premium is adequate in certain circumstances, for instance, the interest rates are very low over a long period of time, a situation may arise in which the pension scheme becomes so expensive that the premium is no longer sufficient to accrue the entitlements with the agreed percentage (2015, 1.875%). In that case, as the premium is fixed, the premium will not cover the costs of pension accrual. In such a situation, the premium will not be raised, but pension accrual will be cut. Cutting the accrual is also conditional and of course not to be taken lightly - there are rules to be agreed upon by social partners. Reduction of accrued pension entitlements and pensions in payment If the funding level of the fund is not sufficient in terms of Dutch legislation and PDN is not able to meet the recovery plan submitted to the Dutch National Bank (DNB), the Board may or must decide to cut the accrued pension entitlements of active and former members and consequently payments of pension beneficiaries. Freedom of choice regarding pension and pensionable age The PDN pension scheme is flexible, which means that the participant can contribute in circumstances to accrue pension in a flexible way. Dependent on wish and as finances allow. During life choices have to be made whether to consume certain means or to save for later on. Usually you will start receiving your pension from your pension age, unless you opt for a part-time pension, for instance (for the various choices, see chapter 3a.) PDN will assist you on the choices, but you are to make the final decisions. After all it is your own pension! Reaching retirement age? Three to six months prior to your pension date PDN will send you an application form to claim your retirement pension. You will also receive a number of choice forms which you will be asked to complete and return. The options include the exchange of the partner's pension and the adaptation of your pension payments (e.g. more in the beginning, less later on or vice versa). Topical As a pension fund participant you will receive a Uniform Pension Statement (UPS) annually. This standardized overview provides insight into the existing and future pension situation of the participant and their surviving relatives (if any). Also, PDN issues an annual report to communicate events and the results of the pension fund during the past year. 9

10 2a. Your pension specifics As of your retirement date you will be entitled to the retirement pension. From 1 January 2014, the contributions for pensions are connected to a pension age of 67 years. The pension entitlements accrued before 1 January 2012 are based on a pension age of 65 years. Pension entitlements accrued from 1 January 2012 until 1 January 2014 are based on a retirement age of 66. The actual retirement date chosen (by you) will be used to calculate your pension benefit. This means that for many members the pension accrual consists of three parts (with different target retirement ages) which are converted into one benefit amount at the actual retirement date. The pension revenues in most cases will be as follows: The AOW. This income is determined and paid out by the Social Insurance Bank in the Netherlands. The retirement pension. The pension built up at PDN and paid out by PDN. Any increase in the retirement pension. This may be the case, if you have pre-pension capital. If applicable: pension payments by other pension providers (insurer / pension fund) on the basis of a private insurance or non-transferred pension entitlements elsewhere. The PDN scheme and payment of the pension premium are explained step by step under: 2b. Retirement pension 2c. Payment of the pension premiums 2d. What to do in case of occupational disability? 2e. Partner's pension 2b. Retirement pension All employees automatically build up a retirement pension. The retirement pension, plus the AOW payment paid out by the government and any additionally saved up pension together make up the income you will receive from the retirement date (chosen by you) until you pass away. During your period of employment with DSM the accrued pension will be linked as closely as possible to the general salary trends at DSM (see also chapter 2, section How will your pension remain fully indexed? ). When you leave DSM your membership of the pension scheme ends and you stop accruing any more retirement pension at PDN, although the pension you have accrued during your career remains on your account. Pension basis As a Dutch inhabitant you will receive AOW as of your state pension age. The height of the AOW is conditional and for these terms please consult For this AOW part no pension within PDN will be accrued and this part of the salary will not be included on calculating the PDN pension. This AOW part is called 'deductible' or the 'non-contributory threshold'. The deductible is determined annually (2015: 12,642). The remainder after deduction is the pension basis - the part of the salary (up to a maximum of 100,000) constituting the basis for your future pension. At PDN you build up 1.875% pension annually for this part. The Uniform Pension Statement (UPS) you receive from PDN every year, shows how exactly your annual pension accrual is calculated. 10

11 An example calculation of a deductible of 13,000 Pieter is 25 years old. His gross income is 29,000 annually. 29,000-13,000 deductible = 16,000 pension basis. For this sum Pieter builds up 1.875% pension in one year % of 16,000 = 300 (gross annually). Let s say Pieter would only be employed for one year, then he would receive a gross amount of 300 annually as of his pension age (+ any indexing). If Pieter spends 40 years working at DSM and earning the same salary, then he will build up 40 x 300. In this case Pieter would be receiving a gross amount of 12,000 annually as of his retirement date in addition to his AOW benefit. Early retirement You can take early retirement before your official retirement date by adjusting the retirement date. Consequently, this does have implications for the level of your pension. Retiring early with limited loss of pension is possible by participating in other voluntary savings (e.g. banksparen or other insurance products). If you do want more information about these possibilities please consult your financial advisor. The PDN pension planner can help giving information about retirement possibilities and accruals within the PDN fund. Moreover you can also consult the website of Mijnpensioenoverzicht.nl. Pre-pension capital As of January 2005 the Dutch government decided to abolish the pre-pension or early pension scheme for employees born after 1949 on. The so-called pre-pension capital which employees had accumulated at that date will be reserved in a separate depot, for payments as of the age of 60 until the pensionable age. This pre-pension capital will give a return on capital each year. This return is conditional and dependent on the return on investments of PDN. Each year the Board of the fund will decide over these returns. 2c. Pension premium To accrue your pension, the employer pays the major part of the required premium to PDN. The level of DSM's fixed pension premium has been laid down in a so-called administration agreement between PDN and the employer. This contribution - a percentage of the gross annual salary - has been agreed upon by the employer and the trade unions). The premium has been fixed until A fixed pension premium means that the employer pays PDN a fixed percentage of the pensionable salary. The goal is to ensure that this sum covers the costs of the pension accrual. In case, the costs for this accrual may be higher than expected in which case the fixed contribution will turn out to be too low to accrue the entitlement with 1.875%. PDN may then decide to lower the pension accrual, as the employer will not increase its premium. All employees will of course be notified if this should happen. As mentioned earlier, you also pay your own share of the pension premium. The level of the personal contribution is laid down in the (collective) labor agreement (CAO). The contribution paid by the employees of DSM NL Services B.V. is 5.5% of the amount by which the pensionable earnings exceed the deductible in force (the pensionable basis). The employer will deduct your contribution from your gross salary every month. In some situations the employer may pay lower contributions. He may even decide to stop paying contributions at all if he is experiencing financial difficulties. If this does happen, PDN will be informing you immediately. 11

12 2d. What to do in case of occupational disability? What happens to your pension accrual in the event of occupational disability? If you become (partially) occupationally disabled you will continue to build up pension with PDN partially or entirely. Depending on the extent to which you are occupationally disabled you will pay part of the pension contribution or none at all. WAO and WIA On 1 January 2006 the Work and Income Act (WIA) became effective, replacing the former WAO. The WIA applies to all staff who became occupationally disabled on or after 1 January The WAO rules still apply to the WAO cases that existed before 1 January Maximum The state disability benefit (WIA) is paid up to a maximum salary. You will not receive a benefit on the salary over and above this amount. If your income exceeds this maximum ( 51,249 in 2015??)however, an occupational disability pension is insured at PDN. The amount of this pension is based on the part of your salary exceeding the maximum. In case of permanent full occupational disability the pension amounts to 70% of the pension wage over and above the set maximum. Pension build-up in case of illness and occupational disability During a period in which you are entitled to continued payment of wages due to illness in accordance with the Dutch Civil Code or to payment due to the Sickness Benefits Act, full pension build-up will be continued. During the period in which, after the abovementioned period of illness, you are entitled to a disability benefit (WIA), PDN will continue the pension build-up as long as you remain occupationally disabled for at least 35%. Note: If you submit a decision within the scope of the WIA, you will need to provide PDN with a copy. We also need a copy of such decision in case the occupational disability percentage is amended. Please consult the fund s helpdesk. You will be entitled to a disability benefit during the period for which you, as a participant, receive a WIA payment after termination of your participation of PDN on the basis of permanent full occupational disability (at least 80%). Percentage occupational disability on the basis of the WIA Percentage continued pension buildup > 80% 100% 65 to 80% 75% 55 to 65% 60% 45 to 55% 50% 35 to 45% 40% 12

13 2e. Partner's pension Your pension is one of your sources of income after retirement. In the event of death of the participant, a partner's pension is provided for to grant an income for your surviving partner. Under certain conditions your partner will be entitled to this partner s pension. There are several partner pensions and the pension paid out partly depends on whether you were still working for DSM when you passed away. If you stop contributing to the pension fund (for instance, because you are no longer a member of the PDN pension scheme), you will retain the entitlement to the partner's pension accumulated with PDN up to that point. After a divorce your former partner will retain the entitlement to the partner's pension which has been accumulated up to the divorce date. Unless the marriage settlement or divorce agreement lay down different terms. With your partner s consent, you can also convert the accumulated partner's pension into a higher retirement pension (see also chapter 3b). On the annual Uniform Pension Statement you receive, your partner's pension is stated as well. The partner's pension for life amounts to 70% of the retirement pension. The definition of partner To make things perfectly clear: 'partner' is the person to whom you are married or your partner registered at the Register of Births, Marriages and Deaths. The partner's pension is also offered to the partner with whom you have a notarial cohabitation contract that PDN is aware of. The term partner does not apply to the partner you marry, the partner whom you register, or the partner with whom you sign a notarial cohabitation contract after retirement. A few examples Situation 1 You pass away while you are still working for DSM Should you die before the retirement date your partner will receive a lifelong partner s pension of 70% of the retirement pension, which you would have built up by your retirement date. Until your partner reaches the state pension age, he or she will receive a temporary supplement (temporary partner s pension) and a supplementary partner s pension. The temporary partner s pension amounts to 20% of the lifelong partner s pension and is partly granted because of the higher fiscal deductions until the state pension age. In contrast to the lifelong or temporary partner s pension, the supplementary partner s pension is insured on a risk basis. Consequently no accruals have been made for this additional pension. Whether or not the surviving partner is entitled to a state ANW benefit partly depends on your partner s age, on whether or not the partner has children younger than 18 and on the income of the surviving partner. If the surviving partner is entitled to ANW, this will not interfere with the level of the partner s pension paid out by PDN. Situation 2 You pass away after retirement In this case your partner will receive the partner's pension until he or she dies. The lifelong partner's pension amounts to 70% of the retirement pension. This is not the case if, on commencement of your retirement pension, you decide to exchange the partner's pension for a retirement pension (see chapter 4b section Exchange of the partner's pension ). 13

14 To receive the partner's pension you and your partner must be formally in a relationship (see above The definition of partner ) before retirement. If your partner has not reached retirement age upon your death, he/she will receive the temporary supplement and supplementary partner s pension described in situation 1 until reaching retirement age. You will not receive this if you have left the company before you retire. Situation 3 You pass away before retirement, but you are no longer working for DSM The pension you have built up in the period in which you were working for DSM is being calculated for this purpose. Your partner will receive 70% of the retirement pension that you have built up with PDN. If your partner has not reached retirement age upon your death, he or she will receive the temporary allowance described in situation 1 until the state pension age, provided that the pension built up with PDN has not been transferred to the pension administrator of your new employer. Special partner's pension The accrual of (temporary) partner's pension becomes a 'Special partner's pension' in the event of divorce. Your former partner will retain the right to this pension, unless agreed otherwise in the divorce agreement or in any prenuptial agreement. Orphan s pension for your children For your children the pension scheme provides for an orphan's pension. This is a temporary payment made to them from your death, until they are 18 years old. The orphan's pension is doubled, if both parents have passed away. Studying and disabled children are entitled, under certain conditions, to an orphan's pension until the age of 27. The level of the orphan's pension amounts to 14% (half orphan) of the retirement pension, if one of the parents is still alive and to 28% (full orphan), if both parents have passed away. 14

15 3. Choices and changes of circumstances During the years that you build up your pension, many things may change in your work or personal situation. Many of these changes will affect your pension situation. If you live in the Netherlands, some changes are automatically passed on to PDN, as in the case of a move, death, marriage and divorce. In case of any other changes in circumstances, it is imperative that you inform PDN directly yourself. It is also in your own interest to make a number of pension choices on time. You can read more about this in the brochure Notify PDN of changes on the PDN website. These may be choices that are relevant just prior to your retirement, but they may be relevant at an earlier stage as well. 3a. Pension choices Everyone does have his or her own personal wishes regarding his working life and during retirement. That is why PDN offers a number of choices one can make during the active working life or when one is about to retire. In this way it might be ensured that your pension situation matches the personal situation more closely. Below the options are outlined: Choices during employment Early retirement It is possible to stop working early (as of the age of 60), by bringing forward the retirement date. Of course, this does have implications for the level of your pension revenues. Retiring early without (or limited) loss of pension is possible by participating in other voluntary schemes (see also 2b early retirement). If you have built up early pension or pre-pension capital until 1 January 2006, this capital will be reserved in a separate depot (for further details, see chapter 2b, section Early retirement ). If you want to retire early, you must submit a request to DSM at least 3 to 6 months prior to the desired commencement date. If your request is accepted it will be forwarded to PDN. PDN will draw up a statement or quotation. Choices at retirement 'Part-time pension' Would you like to work fewer days per week and have a pension payment? That is possible. One should submit a request to that effect to DSM at least 3 to 6 months before the desired starting date. The same procedure applies as outlined in the section Early retirement. You can compensate (in part) for the lower salary you will receive when you are working part-time with a payment of your PDN pension. Please keep in mind that a part-time pension can only start from the age of

16 Switching the partner's pension Do you not have a partner or is your partner financially independent? Then on the retirement date you can choose to (partially) switch the partner's pension for a higher retirement pension. If you choose to transfer the entire partner's pension, your retirement pension will increase by about 20% (depending on the chosen pension age). Using the pension planner on the PDN website you can calculate the concrete results of the trade-off. To make this decision you require your partner's permission. In this case your partner will receive no partner s pension or less partner s pension after your death. First high, then low or vice versa? From the time that you retire you will receive a monthly pension payment. If during the initial period you would like extra income, for example if you want to travel, or if you still have certain financial obligations such as paying off a mortgage, then PDN will take account of your personal situation and adapt the pension benefit. You can choose between a higher retirement pension in the period just after retirement in exchange for a lower payment in the period thereafter. Or vice versa, because that is also an option. 3b. Changes in your personal situation Moving If you decide to move in the Netherlands, you do not need to notify the pension fund. PDN will automatically receive your new address details from the Municipal Personal Records Database (BRP). But you must of course notify the municipality of your move. If you are moving to or in a foreign country, or from a foreign country to the Netherlands, then you must give PDN a written notification of your old and new address details. Marriage or cohabitation When you pass away, your partner can claim a partner's pension. What action must be undertaken If you are going to marry or enter into a registered partnership in the register of births, deaths and marriages in the Netherlands, then you do not have to take any action. If this takes place abroad, then it is important that you notify PDN. You must submit a copy of the certificate concerned. If you are going to cohabit and this is recorded in a notarial deed, then you must send a copy of this to the pension fund. If you do not submit a copy of the (notarial) deed to the pension fund or if you do not state that you have married or entered a registered partnership abroad, then your partner is not insured for the partner's pension! Divorce, what next? If you and your partner (*see below) separate, then you are required to notify PDN. Your former partner retains the right to the partner's pension built up to the date of separation. With regard to the retirement pension, the pre-pension savings and voluntary pension savings entitlements, your former partner will be awarded half. This only applies in as far as these were built up during the marriage period or the partnership. 16

17 A different division of retirement pension A different division of the retirement pension, the pre-pension and the partner's pension is possible in the event of a divorce, but this must have been agreed on with your (former) partner in a prenuptial agreement or after the divorce in a separation/divorce agreement. The employees of the Pension Desk (+31 (0) ) can provide more information on this. We also refer to the special brochure on our website. 'Partner' is understood to mean: The person to whom you are married, or The person who is registered as your partner in the register of births, deaths and marriages, or The person with whom you have a notarial cohabitation contract. Please note that the person with whom you enter into one of the above-mentioned partnerships after your retirement, is not entitled to a partner's pension. Children If you have children, it is good to know that they are insured for an orphan's pension. You do not need to notify PDN of the birth of your children. In the event of your death, PDN will collect the required information on your children. For further information please see chapter 2e 'Dependents pension'. Death Benefits If you, your partner or one of your children, who receives an orphan's pension, dies in the Netherlands, then you do not need to notify PDN. PDN will automatically receive a notification from the Municipal Personal Records Database. If you, your partner or one of your children, who receives an orphan's pension, dies abroad, then you or your partner must notify PDN. In the event of a participant's death PDN will notify the surviving dependent(s) as soon as possible with regard to entitlements to a partner's pension and/or orphan's pension. Calculating the consequences of pension choices A pension choice made during your employment or on retirement affects the amount of the pension payment. Your pension benefit is calculated on the basis of your pension accrual. From 1 January 2012, this pension accrual in most cases comprises three parts. The part accrued before 2012 on the basis of a standard retirement age of 65. The part accrued from 2012 until 1 January 2015 is based on a standard retirement age of 66. As of 1 January 2015 a pensionable age of 67 is applicable. This means that accrual as of 1 January 2015 are based on an age of 67. The pension benefit is calculated on the basis of the actual retirement date (chosen by you). The parts of the pension accrual (with different standard retirement ages) are converted into a single benefit on the actual retirement date. 17

18 3c. Changes in your work situation New to DSM As soon as you enter the employment of DSM in the Netherlands, you will take part in the pension scheme and you will automatically be registered with PDN. In a number of areas you will need to take action yourself. This is necessary for the (voluntary) transfer of the pension that you might have built up with any previous employer(s), your partner's details and whether or not you want to take part in some voluntary pension savings scheme (see brochure NPS for salaries over 100,000. Transferred pension entitlements In most cases you can transfer your pension entitlements by other pension funds to PDN. This is called a value transfer. The pension entitlements you transfer continue to increase at PDN as your accrued pension entitlements are conditionally adjusted with indexation. You can request a value transfer by downloading the application form on our website In the case of several asset transfers, because you may have had several employers, you will have to submit a separate application form for each employer (in duplicate). Your former partner could be entitled to a share of the retirement and partner's pension that is insured via your former pension administrator. This partner's pension cannot be transferred by your former pension administrator. In the event of your death, this partner's pension will be paid out to your former partner by your former pension administrator. The share of the retirement pension that is intended for your former partner can be transferred. If you retire, PDN will pay this share to your former partner. Leaving employment If you leave DSM, with the exception of special cases, your pension accrual with PDN will cease. The accrued pension entitlements, possibly increased, and any capital in the prepension savings (PPS), can be transferred to your new employer's pension administrator. To do this you must submit a request to your new pension administrator. The pension provider will contact PDN to arrange the value transfer. If you do not opt for the value transfer, then your pension entitlements will be conditionally indexed. This means that, in the same way as new pension accruals are indexed, they will follow value development in as far as the fund's financial position allows. Interest is paid annually on your PPS capital (please see chapter 2). Earning more or less Your pension accrual is linked to your pensionable salary and PDN applies the so-called conditional average salary. For a more elaborate explanation please see chapter 2b 'Retirement pension'. You do not need to take any action as a result of changes to your salary. These changes will be processed automatically. Unpaid leave, working less or more A distant journey, a new home, an addition to the family or caring for a sick family member? These are all justifiable reasons for taking a period of leave. A temporary leave from work or working less for a lower salary does have consequences for your pension accrual. If you take a period of unpaid leave, you will not accrue any pension during this period. If you want to work fewer hours during a certain period, for example due to parental leave, then you will accrue proportionately less pension. 18

19 Occupational disability If you become (partially) unfit for work, then the pension buildup will (partially) continue. You will need to submit a copy of the WIA ruling to PDN. In the event of a change in the disability percentage, you must also submit a copy of this decision to PDN. For more information please see chapter 2d 'What to do in case of occupational disability?' Retirement First of all, your retirement date is partly in your own hands. If you want to retire before your ultimate retirement date, you must submit a request to your employer at least six months prior to your retirement. If this is approved your request will be sent to PDN. Irrespective of this possibility, PDN knows your ultimate retirement date. That is why between three and six months prior to this date you will receive an application form for the retirement pension. You will also receive a number of forms on which you can indicate if you want to use the option of switching the partner's pension and if you want a variable income (more first, less later or vice versa). 19

20 4. Questions or changes? If you have any questions about your arrangements, please contact the PDN Pension Desk. In the event of any changes in circumstances which you have to report yourself (see chapter 3), you can also contact the Pension Desk. For the complaints and dispute procedures we refer to our website PDN contact details Post address: PDN, Postbus 6500, 6401 JH Heerlen Visiting address: PDN, Het Overloon 1, 6411 TE Heerlen Telephone Pension Desk: +31 (0) Pension questions by Please include the following details in your message: initials and surname; address; telephone number; date of birth; if possible, membership number. 4a. Further information? You will be sent the following via the post annually. A Uniform Pension Statement (UPS): an overview of the built-up and future pension entitlements if applicable. Visit our website for: The applicable pension scheme rules and regulations The annual report and annual accounts of the pension fund The administrative agreement Relevant information on the fund's investments Information on premiums and indexation At your request the PDN Pension Desk can send you a printed version of the above documents. Information on pension entitlements and the possibilities offered on the basis of the pension scheme is available from the PDN pension desk. Requests can be sent by to info.pdn@dsm.com. 20

21 5. Glossary Annuity A provision that can be taken out with an insurance company on a voluntary basis. The annuity is built up via regular payments of premiums or deposited via a lump sum. Periodic payments can be made as of a certain age and for as long as the person lives. ANW Surviving Dependents Act (in Dutch ANW or Algemene nabestaandenwet) is the statutory basic facility for surviving dependents in the event of a pension holder's death. Not everyone is eligible for ANW as this is dependent on the family situation and the partner's income. The ANW benefit is paid out until the surviving dependent reaches the state pension age. AOW (General Old Age Pensions Act) Under the General Old Age Pensions Act (Dutch abbreviation AOW) every citizen of the Netherlands receives a basic pension upon reaching the state pension age. To build up the full AOW entitlement you need to have lived and/or worked in the Netherlands in the fifty years before you reach the state pension age. For every year less than the required fifty years, the state pension is reduced by 2%. This pension is awarded and paid out by SVB, the Social Insurance Bank. Average salary scheme Type of pension in which the amount of the (achievable) retirement pension is based on your average pensionable salary during your membership of PDN. Deductible The deductible is the amount that is not included in your pension accrual, as you will also receive a General State Pension (AOW). The amount of the deductible is also related to the amount of the AOW. The amount that remains after deducting the deductible is called the 'pension basis'. This is used as the basis for calculating the pension you accrue each year. Early retirement pension Arrangement for employees which allows them to retire before their official retirement date. Former participant A former participant is someone who no longer works for DSM and therefore does not accrue pension under the PDN pension scheme. The former participant does remain entitled to the amount he has built up as a participant of pension entitlements. Another term used in the pension business is a deferred member. Funding level The funding level is a criterion that shows the financial position of the pension fund. It is expressed as a percentage and is the ratio of the pension fund's capital built-up and all the fund's financial liabilities at that time. The higher this coverage ratio, the more certain that the agreed pensions can be paid out. 21

22 Indexation The increase of the accrued pension entitlements by the pension fund. This is aimed at maintaining pension recipients' purchasing power. In other words: the pension payments are periodically (generally annually) adjusted to the increase of the salary or price level (inflation). A conditional indexation applies at PDN. This means that depending on the fund's financial position it will be reviewed annually if a (partial) indexation can take place. Orphan s pension Benefit for the children of an employee who has not reached a certain age upon his death. The age limit is set at 18 years, and for children studying it is 27 years. Participant Employee in the employment of DSM, who participates in a pension scheme and on whose behalf a pension is built up. Partner As 'partner' for a partner's pension from PDN, the following persons are eligible who prior to your death, were: Your husband/wife, or Your registered partner, or The partner with whom you were cohabiting. In the latter case, this needs to have been recorded in a cohabitation contract as drawn up by the civil-law notary. A copy of this must be submitted to the pension fund. 'Partner' is not understood to mean the person to whom you marry or enter into a registered partnership with after your retirement. Partner's pension Regular benefit payments to the member s partner after the member s death. Pension basis The pensionable salary minus the deductible. Pension contributions The amounts that the employer (on behalf of the employee) deposits in the pension fund. Pension entitlement The pension payment that the participant is entitled to after their pension commences. Pension scheme rules and regulations The legal text of the pension scheme. This explains how a pension is built up and can be calculated. Pensionable salary The gross annual salary, or the salary components that are included in the buildup of the pension. Retirement date Date on which the retirement pension commences. 22

23 Retirement pension Periodic payment from the retirement date, paid out to the (former) participant. The retirement pension is paid up to and including the month in which the pensioner dies. Returns The direct investment returns. These can be rental income (for investments in property), interest payments (on bonds), dividends (on shares invested) or the increase or decline of the market value of the assets of a pension fund. Special partner's pension The partner's pension to which your former partner is entitled, after a relationship has ended. Just like the 'normal' partner's pension, the special partner's pension is paid out after your death. Supplementary pension Pension provisions supplementary to the retirement pension (AOW). Switch option Switching one type of pension for another. For example trading/switching the partner s pension for extra retirement pension. Temporary partner s pension Provides a benefit for any surviving partner until the first day of the month in which that person reaches the state pension age. Value Transfer Taking the old pension to the new pension administrator. The value of the old pension is converted into extra pension entitlements with the new employer. WIA The WIA (Work and Income Act) is based on a person s capacity to work. The WIA also provides income protection in the event of occupational disability. The act consists of two parts: the Return to Work for the Partially Disabled Scheme (WGA) and the Persons Wholly Unfit for Work Income Scheme (IVA). 23