Explanatory slides regarding the. pension. December 23, 2014

Transcription

1 Explanatory slides regarding the impact of the new legislation on your pension December 23, 2014

2 Key messages As per January 1, 2015 your net income will go up as you are no longer required to pay the employee contribution into your pension for the part of your pensionable salary exceeding the threshold. As per January 1, 2015 you are entitled to a gross pension allowance. This allowance is taxable at time of payment. After taxes are deducted, you will receive a net amount each period with your regular salary payment. Ahold and the COR/VAHP are currently discussing the proposed methodology to determine this gross pension allowance. You will be informed on the outcome early Taking into account implementation timelines, it is unlikely that you will receive this allowance with the period 1, 2015 salary payment. However, the allowance will be paid retro-actively (i.e., back to January 1, 2015) at a later stage. A temporary risk insurance for preretirement death will come into effect as per January 1, 2015, will last for a year and will be paid for by Ahold. This ensures that the new legislation has no negative consequences to your partner pension if you were to pass away in 2015 while in active service at Ahold. To be developed in 2015: Voluntary net pension plan (savings- and risk component) Ahold will facilitate a solution that would allow you to voluntarily accrue benefits (out of your net salary) in lieu of the accrual for your pensionable salary over under the current pension arrangement. A voluntary savings- and risk insurance plan ( net pension plan ) will be offered through a third party. Ahold has started t the process of selecting a provider. Ahold Pension Fund will not be able to offer such a net pension plan. As soon as a contract with a third party provider is signed you will be informed on the details, what is needed to participate and how much you are allowed to pay into the net pension plan. 2

3 Current State - Overview Risk Insurance (death & disability) Employer Employee Gross premium Pension fund Tax payments Net pension At retirement age, the pension benefits are paid gross and taxes are due Accrual phase 65 Benefit/pensioners phase Both the Employer and the Employee pay a premium into the pension fund The pension fund invests the money to generate a return offers a risk insurance to cover the consequences of pre retirement death and disability You accrue benefits up to the age when the state pension ( AOW ) starts At age 65, you can enjoy your pension and taxes are due. Early retirement is also possible. Taxes are paid at each retirement payment (as is currently the case with your salary payments) Simplified example (assuming pensionable salary of ) Would you work for Ahold 35 years at a salary of , your annual Ahold pension would be (gross, annually) (35 x 2% X ( *)). * Income offset (franchise) is approximately (this part of your pension benefits is covered by the state pension) 3

4 Summary of changes Per January 1, 2015: Due to changes in fiscal legislation, the pension is maximized at an accrual rate of 1.875% per year at age 67 with a maximum pensionable salary of At Ahold the maximum salary amounts to approximately to allow pension benefits of 2% per year at age 67 up to this amount. This maximum will be updated periodically Pensionable age will move to age 67 or earlier date of state pension ( AOW ) Please note, earlier retirement still is possible Pension accrual is no longer fiscally facilitated for the part of your salary over In case of pre retirement death or disability, this part of your salary also is not covered Assuming gpensionable salary of : Current state: Pensionable Salary Currently you accrue pension on your total pensionable salary (minus an offset) Per January 1, 2015 Pensionable Letter December 2014: Salary Pension accrual is no longer facilitated for this part of your salary In case of pre retirement death or disability, this part of your salary is not covered Letter November 2014: Pensionable age moves from 65 to 67 Pensionable salary is capped at Rest remains as is Accrual rate (2% annually) Contributions made by employer and employee 4

5 New State - Overview Pensionable salary exceeding Employer Net allowance is paid to employee who can decide to invest in pension saving and/or risk insurance vehicle and/or use as net income Tax Net pension allowance Employee Risk Insurance Exempted from wealth tax in Box III Pension Savings Wealth tax in Box III Insurance premium (death & disability) At retirement t age, the pension benefits are net (no tax at pay out) Net benefit Accrual phase Net income 67 Benefit/pensioners phase Risk Insurance (death & disability) Employer Pensionable salary up to Employee Gross premium Pension fund Tax payments Net pension 67 Accrual phase Benefit/pensioners e e s phase 5

6 Summary of changes simplified examples Simplified example Current Would you work for Ahold 35 years at a salary of , your annual Ahold pension at age 65 would be (gross, annually) (35 x 2% X ( )). Simplified example New You have already worked for Ahold for 20 years at a salary of , your annual accrued Ahold pension at age 65 year would be (gross, annually) (20 x 2% X ( )). If your pension is postponed to age 67 your accrued Ahold pension increases on average with 10% to Would you work for Ahold for another 17 years at a salary of , your future accrual at age 67 would be (gross, annually) (17 x 2% X ( *)) )). At age 67 your annual Ahold pension would be (gross, annually) ( ) Ahold will pay a gross allowance; and you do not have to pay the employee contribution for the part of your salary over anymore. You may use this to make up (some of) the difference * Income offset (franchise) will be lowered with an additional

7 The Savings Component Challenge The new legislation can have a substantial impact on the pension benefit. There will be a substantial reduction in benefits (depending on how much you earn over ) at retirement age Status As soon as a third party is selected (in 2015) you will be informed on the details. Start at the latest per January 1, Voluntary Participating in the saving vehicle will be voluntary The Risk Component Challenge The new legislation will have a substantial impact on the partner pension in case of preretirement death Not sufficient time left to set up an insurance on individual participant level without medical testing Status Ahold has made an arrangement for a year (as a temporary solution) and has put an insurance in place to cover all employees for the pensionable salary over During 2015 you will be informed on the details for risk coverage as of January 1, 2016 Voluntary Participating in the risk vehicle will be voluntary as of January 1, 2016 Note: for 2015 all employees are covered. This is paid for by Ahold 7