On October 8, 2024, the House of Representatives passed the proposed Lump Sum Review Act. This law makes it possible, at the time you retire, to withdraw up to 10% of your pension assets in one lump sum. We call this 'lump sum'.
 

When you retire, you make a number of choices for your benefits. Added to these is the choice lump sum. With this choice, you can have part of your pension paid to you in one lump sum. This can be a maximum of 10% of your retirement pension. By choosing lump sum, you will receive a lower pension for the rest of your life.

The legislation has not yet been finalized; the proposal must still be passed by the Senate. Probably you will then be able to use this option from July 1, 2025 at the earliest. Because the new rules are not yet final, it is not yet possible to calculate how much money you can receive at once. So we also cannot yet see how much pension you will receive later if you choose lump sum. 

 

Consequences for taxes and benefits
If you opt for a lump sum, your income in the year of payment will be higher. This can have consequences for any benefits you receive, such as rent or healthcare benefits. Those benefits will be reduced or cancelled altogether.

If you retire before receiving AOW, you may also pay more tax. The lump sum means that your income may fall into a higher tax bracket. You may have less net income than you expected. The exact consequences depend on your personal situation and the amount you receive.

Choosing high-low or a lump sum
Will you retire before you receive AOW? Then you can opt for a higher monthly payment temporarily at first. You will then receive a lower benefit as of your AOW pension age. This choice cannot be combined with a lump-sum payment. So you can choose either a temporarily higher pension benefit or a lump sum.

When you cannot choose lump sum
There are some situations in which you cannot choose a lump sum:

• Lump sum cannot be combined with a high/low pension
• If your pension is lower than the surrender limit in the year you retire (in 2024 this amount is €592.51 per year)
• If due to lump sum there is not enough pension left, i.e. becomes lower than the commutation limit (in 2024 € 592,51 per year) 
• If you are already (fully) retired

Is lump sum an appropriate choice?
Amount lump sum is an important choice and can have major consequences. Whether it is a good choice depends on many things. Do you have questions about your retirement choices? If so, please feel free to contact us.