Postpone life annuity payment

Smart waiting or taking a risk?

You have invested for years for your pension and now the moment of truth is approaching. But what if you do not need that money yet? Postponing your annuity payout can be a smart move, but there is an important pitfall attached to it that could cost you thousands of euros.

Why would you want to wait?

There are plenty of reasons not to let your payout start immediately. Perhaps as a self-employed person (zzp'er) you simply continue working after your state pension age (AOW-leeftijd) and do not need the extra income yet. Or, as a director/major shareholder (DGA), you have just sold your company and want to prevent ending up in the highest tax bracket. By waiting, your capital remains invested and can continue to grow. Moreover, you may later fall into a lower tax bracket, leaving you with more net income.

Assume: you have accumulated capital of 100,000 euros by your state pension age. With a few years of postponement and a positive return, this could grow to 115,000 euros. That quickly saves 80 to 120 euros per month in payouts. No guarantee, of course, because postponing longer also means longer investment risk. But the potential effect is real.

The deadline you must not miss

Here is the most important thing: you cannot wait indefinitely. The Tax Authorities (Belastingdienst) apply a strict limit. You must start receiving payouts no later than the calendar year following the year in which you reach the state pension age (AOW-leeftijd). If you reach the AOW in 2025? Then your payout must start no later than 2026.

If you miss that deadline, the tax authorities see this as surrender (afkoop). The consequence is painful: you pay income tax on the entire amount, plus 'revisierente' (penalty interest) of up to 20 per cent. With a capital of 100,000 euros, that can easily cost 40,000 euros or more. This is not a theoretical risk; it happens to people who simply forget it.

What happens fiscally while you wait?

As long as you postpone, your capital remains entirely under the annuity scheme (lijfrenteregeling). That means: no income tax and no wealth tax in box 3. Your money continues to grow in a fiscally friendly way. You only pay tax upon the actual payouts, often at a lower rate than during your working years.

And upon death?

With an investment annuity (beleggingslijfrente) like at Vive, your accrued capital is not lost. It remains available in principle for your surviving dependants. They must convert it into a surviving dependant's annuity (nabestaandenlijfrente): periodic payouts according to the fiscal rules, with a minimum term that depends on their age and situation. This is in contrast to some traditional annuity insurance policies or collective pension schemes, where the remaining capital may go to the insurer.

Keep a handle on your timing

With Vive, you see exactly where you stand in the app: how much you have accrued, what postponement does to your expected payout, and when it is sensible to start within the fiscal limits. No surprises, no missed deadlines. You decide yourself, based on current figures.

Curious about how much you can still deposit with a fiscal advantage? Check the annual allowance calculator. Or read more about pension investing if you are still building up capital.

‍