Country Panel Presentation: The Netherlands

Transcription

1 Country Panel Presentation: The Netherlands 2016 IGP Regional EMEA Seminar Windsor, May 24-26, 2016 Accountmanager IGP This presentation was exclusively prepared for the attendees of the 2016 IGP Regional EMEA Seminar. None of the contents of this presentation may be copied or disclosed to any other party or used for any other purpose than the one mentioned above without IGP's prior written permission. 1

2 Key Topics Background Information Social Security Private Practice Taxation Administration Legislation Country and Company Info & Background 2

3 Background Information Company Info a.s.r. Major focus on customer requirements, efficiency, robustness and balance sheet optimization Strong financial performance in 2015 Sharp rise in profit Robust solvency position More information: Key Figures Solvency I ratio 305% 285% Solvency II ratio 185% 170% Profit 601 million 423 million 3

4 Background Information Country Info Key Figures: No of residents 17,008,640 May 2016 Economic growth 2.0% 2015 Unemployment 8.1% March 2016 Consumer confident 2 April 2016 Inflation 0.6% March 2016 Source: that The Netherlands: Has more bikes than inhabitants? Is the most densely country in EU? Is the third largest exporter in the world? Has the second best pension system in the world? 4

5 Key Topics Background Information Social Security Private Practice Taxation Administration Legislation Summary of Social Security Benefits 5

6 Social Security Benefits Summary of Dutch Insurance Three Pillar System Money Savings Old sock Saving Accounts Increased house value Private Old Age Annuity Survivor s Annuity Private Disability Insurance Employer Employee Retirement Survivor s Orphans Group Disability Government General Old Age General Survivor s General Disability

7 The Three Pillar System in other countries Source:

8 Summary of Social Security Benefits Social Security Social Insurances Contribution via wage taxes Social Facility Financed by income tax and applicable if income is lower than minimum wage General Social Security Act (ABW) National Insurance Employee Insurance All citizen's are entitled to this insurance. It s paid by employees. Old Age Act (AOW) Death Insurance (ANW) General Act on Exceptional Medical Expense (AWBZ) Sickness Benefit (ZW) Health Insurance (ZVW) All employees are insured. Financed by employer and employee Unemployment Insurance (WW) Disability Insurance (WIA)

9 Death Age Development over past 65 years

10 Summary of Social Security Benefits First floor: Retirement (AOW) - Every citizen in The Netherlands - Accrual from 15 year plus 6 months (2016) - Full gross benefit: 784 (married) or 1,138 (single) per month - Current state retirement age: 65 years + 6 months - Gradual increase in retirement age to 67 in 2021 Three Pillar System Death (ANW) - Surviving partner has to meet the requirements - Benefit reduced if other income sources - 1,168 gross per month Disability (WIA) - After 104 weeks - Declared disabled for at least 35% - Fully and permanent disabled: 75% of final salary - Otherwise, percentage of minimum wage up to 70% of final salary (WGA) - More work is rewarded General Old Age General Survivor s General Disability

11 Disability Benefits - Overview of the Social Security First 104 weeks of illness/disability: Employer pays up to 100% of maximized final pay in the 1 st year and up to 70% in the 2 nd year Disability < 35% Disability 35% and < 80% or 80% but not permanent Disability 80% & permanent No WIA benefits Loss-of-income WGA benefit (max 38 months) 70% (old salary new salary) (first 2 months: 75%) IVA benefit WGA follow-up (RLC used < 50%) p % min. wage WIA supplement (RLC used > 50%) 70% (old salary earning capacity*f) 75% of maximized final pay

12 Key Topics Background Information Social Security Private Practice Taxation Administration Legislation Customary Private Employee Benefits: Type & Level of Benefits / Survey Data / Plan Design / Benchmarking / Trends 12

13 Customary Private Employee Benefits The second floor Despite the fact that there is no obligation for the employer to arrange a benefit for their employees, many employees in the NL has a second-pillar benefit. Three Pillar System Why is that Employer Employee Scheme + Disability coverages Government Old Age 784-1,568 Gross per month Survivor s 1,168 Gross per month Disability 0-3,200 Gross per month

14 Customary Private Employee Benefits Scheme What do you kno 1. If you want to set up a new pension scheme in The Netherlands or want to extend or change the current one: hire a certified independent advisor. 2. Start at least one year prior to the adjustment date with your preparations.

15 Customary Private Employee Benefits Scheme Funds The advisor will investigate if you are obliged to enter the Industry-wide Fund. Industry-wide Fund: Covers almost 80% of the employees Still mostly DB schemes Possibility to reduce pension annuities Employers influence/involvement is minimal

16 Customary Private Employee Benefits Scheme Other Providers and Types of Plans Other Providers and types of plans Company Fund Insurance Company Premium Institution General Fund (2016) DB Conditional rights DB Guaranteed rights DC Investments and guaranteed based DC Investment only Collective DC Hybrid Basic DB / Excess DC X X X X X X X X X X X X X X X X

17 Customary Private Employee Benefits Schemes Trends Current situation 100% 90% Trend Low interest rate Increasing cost DB 40% DC DB fund Insurance Company Alternatives for DB schemes DC schemes Collective DC schemes DB schemes at a General Fund Hybrid pension schemes Current employees DB new employees DC

18 Customary Private Employee Benefits Scheme Level of Benefits DB schemes: Maximum salary 101,519 (2016) Minimum offset 14,657 Final Pay or 12,953 Average Pay Base (PB) Offset AOW Salary 67 Old Age per year PB x percentage (FP: 1.657%, AP 1.857%) Partner s 70% of the insured Old Age Orphans 14% of the insured Old Age Waiver of premium Premium is included in the premium for Old Age, Partner s and Orphans

19 Customary Private Employee Benefits Scheme Level of Benefits DC schemes Premium = PB x % Age Interest rate 4% Interest rate 3% % 7.2% ,7% 8.0% ,7% 9.3% ,9% 10.8% ,4% 12.5% ,2% 14.6% % 17.0% % 19.8% % 23.3% % 27.7% % 31.5% Based on Average Pay 1.875% capital Age 19

20 Customary Private Employee Benefits Disability Benefits Additional: 80,000 Claims Prevention & Claims Management like Re-integration programs 56,000 56,000 36,936 WIA Excess Employer 100% 70% WGA Gap Extended or WGA Gap Basic Second Pillar WGA Income First Pillar 1st year 2nd year Short term Disability WIA Bodem Long term Disability Second Pillar Maximum WIA Ceiling ,766.36

21 Customary Private Employee Benefits The Third Floor: Insurances in the private sector Money Savings Old sock Saving accounts Increased house value Old Age Annuity Survivor s Annuity Private Disability Insurance Retirement General Old Age Survivor s Orphans General Survivor s Waiver of premium, Group Disability General Disability On retirement age In case of death before retirement In case of disability before retirement

22 Customary Private Employee Benefits Medical Benefits Resident - Obliged: Basic Private Health Insurance - Voluntary: Additional coverage - Premium paid to Insurer plus - Obliged to pay an income-related contribution to Government Resident / Employer Government regulation Employer Maximum Employers Contribution 2016: 6.75% x 52,763 = 3, Per year per employee Government - Determines the Basic Healthcare Package - Pays the income-related contribution to the Healthcare Insurer - Pays an income-related benefit to residents with low income Healthcare Provider (like Hospitals etc) Healthcare Insurer Medical Benefits are not a part of Employee Benefits

23 Summary Retirement Death Disability Health Individual Bank/Life Insurance Lump Sum Death Benefit Life Annuities Individual Disability Insurance Mandatory Basic Health, voluntary extra coverages Employer - Employee DB / DC Survivor s ANW-gap (Additionally) WGA-Gap WIA Excess WIA Bodem Sick-Pay Insurance Social Security (Government) AOW ANW WIA (IVA / WGA) AWBZ 23

24 Key Topics Background Information Social Security Private Practice Taxation Administration Legislation Taxation of benefits (e.g. lump sum versus pensions) / Tax treatment of ER and EE contributions 24

25 Taxation Employee Benefits Employer Contributions Premium deductible as business expenses Employee Contributions Premium deductible from gross salary s in payment are taxable income Exception: Net pension 25

26 Key Topics Background Information Social Security Private Practice Taxation Administration Legislation Legal requirements re. administration of benefit plans: actuarial valuations / communications / involvement of unions/employees 26

27 Administration of Plans To take into account: Not allowed to administrate the plan in your own company Advice Communication Independent advisor Involve unions/ employees Start early in the process 27

28 Key Topics Background Information Social Security Private Practice Taxation Administration Legislation Current legislative issues with significant impact on the funding of the benefit plans / How are employer and employees affected? 28

29 Legislation Update Past Years Fiscal Maximum Maximum able Salary Not applicable 100,000 Retirement Age Average Pay Final Pay Average Pay Final Pay % 1.90% 1.875% 1.657% % 1.76% 1.735% 1.505% % 1.63% 1.605% 1.394% 2016 Introduction of the General Fund (APF) 29

30 Thank you for your attention! Key Topics We Discussed: Background Information Social Security Private Practice Taxation Administration Legislation Country and Company Info & Background Summary of Social Security Benefits Customary Private Employee Benefits: Type & Level of Benefits / Survey Data / Plan Design / Benchmarking / Trends Taxation of benefits (e.g. lump sum versus pensions) / Tax treatment of ER and EE contributions Legal requirements re. administration of benefit plans: actuarial valuations / communications / involvement of unions/employees Current legislative issues with significant impact on the funding of the benefit plans / How are employer and employees affected? 30

31 Contact Info Rabia Jagroep a.s.r. / De Amersfoortse Intermediair Consultant Rabia.jagroep@asr.nl Jitka Arslan a.s.r. / De Amersfoortse Intermediair Consultant Jitka.arslan@asr.nl