When you retire, one of the options you have is a temporary higher pension. This gives you a slightly higher income in the first few years of retirement than you would otherwise get. This can be nice, for example if you have higher expenses at the beginning of your retirement. After that, your income gets lower. This is why this option is also called 'high/low'. Below you can read how a Temporary higher pension works and what else is involved.
Temporary higher pension: here's how it works
You choose how many years you want to receive higher retirement income. This can be up to 10 years, valid from the start of your pension. After that time, your retirement income goes down. How much pension you receive depends on the number of years you receive the higher amount. At Zwitserleven, the ratio of high to low pension income is 100:75. This means that after the high period, your pension income will go down 25%. At the start of your pension, both amounts are already fixed, i.e. the high pension income and the lower pension income. Some pension providers also offer the option of receiving a lower pension income first and then a higher one. In practice, very few people choose this. Zwitserleven therefore does not offer this option.
Temporary higher pension and partner's pension
Have you opted for a Temporary higher pension and die during the higher period? If you have arranged partner's pension, your partner will also receive a higher partner's pension for the rest of this period. After that, the partner pension goes down and your partner will receive the agreed percentage partner pension of your lower pension income for life.
When to opt for a Temporary higher pension?
There are advantages and disadvantages to a Temporary higher pension. Whether it is right for you depends on what is important to you. And on your financial situation after retirement. First check mijnpensioenoverzicht.nl to see how much pension income you can expect and how much your partner, if any, will get. This is the starting point for the choices you make for your retirement.
The overview below shows the situations in which you could consider a Temporary higher pension.
- More financial space and options at the beginning of your retirement.
- What's yours is yours. In other words, what you have been given once cannot be taken away from you. After all, you don't know how long you will live.
- You may pay more tax. Because you receive more income during the high period, you may end up in a higher tax bracket.
- Chances are you will get used to the higher retirement income. We also often spend more when we have more money to spend. And let's face it: it is difficult for many people to then have to take a step back after a while.
- You may have higher healthcare costs in old age while receiving a lower retirement income.
- You cannot combine a Temporary higher pension with the choice of a lump sum.
May suit you if:
- you retire before reaching the state pension age. In fact, up to your state pension, you may pay more tax. Moreover, you will not receive a state pension yet. As a result, the pension income you get that first time is lower. By opting for a Temporary higher pension, you can accommodate this.
- you will have higher expenses in your first years of retirement, for example for a mortgage or loan still to be repaid or children's study costs.
- you expect that you will not grow very old for medical reasons, making it attractive to receive as much pension as possible now.
- you have plans to spend extra in the early years of retirement on fun trips, a hobby or other things.
Probably suits you less if:
- your monthly pension income becomes too low after the period of higher pension income to continue paying your fixed expenses.
- you already have additional income, for example from an annuity insurance policy.
- you will need a loan later. With a lower retirement income, you can borrow less.
- you expect to live a long time, making it attractive to continue receiving the highest possible retirement income even in later life. For example, because you may have additional healthcare costs.
Need advice on your choices?
We are happy to help you make choices for your pension. These choices may have major financial implications. Our guidance covers only your pension scheme with Zwitserleven. Whether a choice is right for you obviously depends on your whole personal situation, now and in the future.
Perhaps you should consider contacting an adviser, who can give you an overview of all your financial affairs and help you to make the most suitable choices.