De facto early retirement scheme
A de facto early retirement scheme arises when employers offer employees a redundancy package with the sole purpose of facilitating their retiring early. This represents an RVU which enables employees to bridge the period until they retire financially. An employer can expect to be penalised for this in the form of a final levy from the Tax Administration. Since 2011, this levy amounts to 52%. The definition of early retirement (VUT) appears very broad. However, no penalty for an RVU applies in the case of a redundancy scheme for economic reasons. Nor does an RVU exist in the case of non-age-related individual dismissal, for example due to poor performance, conflict in the workplace or a disagreement regarding the policy to be followed. The burden of proof for this lies with the employer.
Relaxation of RVU
For the time being, the relaxation of RVUs under the pension agreement mentioned above offers employers the possibility of agreeing an early retirement scheme with older employees who want to retire early without the application of the 52% final levy. This temporary relaxation applies to employees who could not have anticipated the raising of the state pension (AOW) age or are incapable of working up to the state pension age for health reasons.
Conditions and bases for relaxation of RVU
With regard to the temporary relaxation of RVU, the following conditions and bases are relevant:
- generic scheme: it is not checked whether the employee concerned is actually capable of working up to the state pension age;
- the scheme covers employees who will reach state pension age within three years;
- temporary measure designed to come into effect on 1 January 2021 and expected to last until 31 December 2025;
- gross exemption of EUR 19,000 per annum (above this, the RVU levy still applies);
- for the exemption to apply, all payments relating to the RVU levy must be made by 31 December 2025;
- possibility of reaching additional agreements at collective agreement level.
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Voluntary on both sides
The temporary relaxation of the RVU is voluntary on the part of both employer and employee. This means that both employers and employees are free to opt for this arrangement and that both parties must agree that the employee will retire and on what terms.
Take action now!
Although the Lump Sum Payment, Early Retirement and Leave Savings Scheme bill (Wetsvoorstel bedrag ineens, RVU en verlofsparen) has not yet been passed, it is a good idea to consider the implication of the RVU scheme and its implementation within your organisation. For example, the scheme can be deployed as a voluntary redundancy scheme in case of restructuring. Exploring which employees might or would want to be eligible for this ensures that these employees can take advantage of this relaxation in due course. An employer then has the option of offering an employee a certain amount three years before state pension age without incurring a final levy of 52%.
