7 ways to supplement your pension

You will soon receive an AOW benefit from the government. If you work or have worked as an employee, you usually also receive employee pension. For one in ten employees, however, nothing seems to be arranged. Are your AOW and employee pension sufficient to pay your expenses? What can you do if you think you need more income after all, or if you have built up little or no employee pension? 

1. Save with an annuity (bank savings) product

Do you regularly want to set aside money for your retirement? Think of an annuity insurance, bank savings account or investment account. This is a supplement to your employee pension. You can deposit money into this product on a monthly or annual basis. Your contribution is deductible if you can prove that you have a pension deficit. You will receive a part of your investment back if you file an income tax return. On the maturity date you must use the money to buy a pension benefit. You pay tax on the amount you receive when the pension has commenced.

2. Single premium policy

A single premium policy is a special form of annuity insurance. With a single premium policy you pay a one-off amount, although you can sometimes add money later. Your insurer or bank will invest this money. On your retirement date, you use the money to buy a benefit.

The same tax benefits apply to a single premium policy as to annuities and bank savings accounts. Get good advice before you take out a single premium policy.

3. Saving and investing yourself

You can also save or invest for your pension yourself. The advantage of this is that in principle you always have access to the money. You pay tax in box 3 every year on your savings and investments. You pay this tax if your assets exceed a certain threshold. The threshold for singles is €50,650 (amount 2022), for partners €101,300 (amount 2022). How much wealth tax you pay depends on how big your wealth is. 

4. Pay off your mortgage

If you have a mortgage that is (partially) interest-only, you can repay more. This way you lower your housing costs when you retire and you therefore need less income. You no longer pay interest on the amount you repay. As a result, the interest deduction that you receive on your tax return decreases.

5. Insist on a pension scheme with your employer

No supplementary pension has been arranged for approximately one in 10 employees. If this also applies to you, you can try to discuss this with your employer. Ask him why he doesn't offer a pension plan. In the meantime, you can ensure support among the rest of the staff, for example via the Works Council (OR). On the website of the Social Economic Council (SER) you will find more tips and you can also report the fact that you are not building up a pension with your employer.

6. Cashing in on the equity of your home

If your home is worth more than your mortgage debt, you may want to consider selling your home. You will then have the surplus value at your disposal. The equity is the selling price minus the outstanding mortgage amount. You will need this money to provide new housing. You can also use it to supplement your retirement income. Incidentally, there are also constructions possible to use your equity without selling your house. Get advice from a financial expert.

7. Working next to your pension

If you ultimately have too little income, you can (continue to) work after you retire. That has no consequences for your other income. As a result, you will not receive less pension or AOW. You pay income tax on the amount you earn.