What is "jaarruimte"?

Annual margin (Jaarruimte) is the amount you may annually contribute tax-free towards your pension accrual. This amount is determined based on your income and the pension accrual from the previous year. If you accrue too little or no pension at all through your employer, you can utilise the annual margin to build up extra pension tax-advantageously, for example, through an annuity.

The annual margin is calculated by taking your gross income from the previous year, subtracting the AOW-franchise (state pension exemption), and then taking 30% of the remaining amount. If you already accrue a pension through an employer, this is reduced by the so-called Factor A, the amount by which your pension grew in that year.

Utilising the annual margin can lead to a tax advantage because the contribution is deductible from your taxable income.