Vanishing pension saving capacity, severance payments and avoiding RVU taxation

Publication date: 1 October 2026

Many employers are finalising the transition to a pension scheme under the Dutch Future Pensions Act (Wet toekomst pensioenen, Wtp). Understandably, attention is focused on contribution levels, transitional arrangements, compensation and communication. Far less attention is being paid to another consequence: individual tax-facilitated pension capacity that is available under the current pension scheme will disappear entirely after the transition.

With the introduction of the Wtp, the possibility of utilising pension capacity relating to years prior to the transition will cease to exist. This is a direct consequence of the legislation. Examples include opportunities to make up for missed pension accrual, build additional pension benefits or repair existing pension shortfalls. Once the existing pension scheme is converted to the Wtp legislation, these tax-facilitated opportunities relating to the past will be lost. As a result, valuable pension capacity may disappear unused.

The relevance of this issue may become particularly apparent when an employer wishes to terminate the employment of an older employee. A severance payment intended to bridge the period until retirement may qualify as an Early Retirement Scheme (RVU). In such cases, the employer may be required to pay a 64% pseudo-final levy (rate applicable from 2027).

A frequently overlooked alternative when terminating the employment of an older worker is the utilisation of available pension capacity. The Dutch RVU rules explicitly allow amounts to be contributed into the pension scheme under certain conditions. An additional pension contribution may therefore help reduce or even completely avoid RVU taxation.

In the run-up to the Wtp transition, employers would therefore be wise to consider whether there are older employees for whom termination of employment may be contemplated in the foreseeable future. Pension capacity that can still be utilised today will no longer be available after the transition to the Wtp and may otherwise result in arrangements becoming subject to RVU taxation sooner than expected. Therefore, before completing the transition to a Wtp pension scheme, it may be worthwhile to examine whether unused pension capacity can still play a role in future severance arrangements.