To retire or not to retire: should you carry on working after retirement age?

In 2024, the average retirement age of employees rose to 66 years and 1 month, according to Statistics Netherlands, up from around 61 years in 2007. The ever-rising state pension age also plays a major factor in this development. The state pension age in 2025 is 67 years.

Whether you retire from work or not, once you reach state pension age, you will receive your state pension. The amount of state pension you receive is not affected by whether or not you work, and you can’t defer your state pension.

Your retirement date often isn’t the same as the date when you reach state pension age or when your private pension becomes payable. Read more about this on Mijnpensioenoverzicht.nl. A lot of people choose to start their private pension payouts at the state pension age, but if you still feel fit and happy to continue working, you typically have the following options available to you:

• You can take your private pension while you continue to work.
• You can take part of your private pension in addition to receiving your income. For example, you could retire part-time for one or two days a week, while working on the other days.
• You don’t take any private pension for the time that you work. The later you take your full private pension, the higher the pension benefit may be. This is because you will be building up your pension for longer, while taking it over a shorter period. You may postpone your private pension for up to five years after your state pension age.

Many collective labour agreements and individual employment contracts state that your employment will be terminated when you reach retirement age. Sometimes you can carry on working for your current employer after reaching retirement age, but you’ll typically have to enter into a new employment contract. 

If you continue working, you may still build up a pension and make pension contributions. Speak to your pension provider for more details. Bear in mind that you’ll no longer be insured for unemployment and occupational disability. If you take sick leave after you reach the state pension age, your employer must continue paying your wages for a maximum of six weeks. They can’t dismiss you during this period, but they are free to do so after six weeks of sick leave. 

An employer doesn’t need authorisation from the Dutch employee insurance agency (UWV) to end your employment contract. You must be given at least one month’s notice and you won’t be entitled to a transition payment. These provisions encourage employers to employ people over state pension age.

From state pension age, you pay a lower rate of income tax on earnings up to €38,441. If you were born before 1 January 1946, this threshold is €40,502. The tax rate in the lowest tax bracket in Box 1 drops from 35.82% to 17.92%. You no longer have to pay a state pension contribution. The benefits in the year you reach state pension age depend on the month when you first draw your state pension.

If you expect your taxable income from your state and private pensions to be less than €38,441, you might consider carrying on working and topping up your pension a bank savings or investment account with tax relief. As of this year, you can do this for up to five years after you reach the state pension age. You can then top up your pension by converting your bank savings or investments into fixed pension benefits. But you need to start taking this pension no later than five years after the state pension age. You’ll then receive a payment every month or year over a pre-defined period.

The tax break is offset by the fact that some tax credits stop or are reduced when you reach the state pension age. Tax credits are discounts on income tax and social security contributions. Once you reach retirement age, your general tax credit will be reduced, and your working person’s tax credit and income-related combination tax credit will stop. However, if you continue working after reaching state pension age, you’ll still be entitled to a reduced amount of these tax credits. You may also be entitled to the elderly person’s tax credit and single elderly person’s tax credit.

Deferring your retirement pension may also have a knock-on effect on your partner’s pension, depending on the scenario. You may even forfeit your right to a partner’s pension if continue working after retirement age. Check your pension plan carefully for any possible consequences and solutions.

As the number of dual earners increases, it’s becoming more and more important for partners to align their retirement plans. Government measures to discourage early retirement and increase the state pension age may affect your finances if you and your partner are considering retiring at the same time. 

This situation often leads to a loss of income for the younger partner if they have to retire sooner. As discussed above, it’s sometimes possible for the older partner to continue working until the younger partner reaches the state pension age, so you can both retire at the same time.

If you’re curious about your options for continuing to work once you reach retirement age or want to know what the consequences would be in your situation, please get in touch with our Preferred Banking team, who will be happy to advise you.

Or read our other articles about money for later.