Commutation of a small pension

• Receiving a small pension. You will then receive a small amount each month on top of your pension income. Usually, this is not very attractive. The costs of disbursing the amount are often higher than the pension income. But it is possible.
• Consolidating pensions at retirement date: if you are in a capital or premium scheme, you can consolidate all the different pension pots (and thus also your small pension). And have them paid out by one pension provider. Read more about consolidating pension pots
• Commuting a small pension when you retire. You have the amount paid out in one go if this is offered to you.

Are you approaching your retirement date? Then it is wise to consider whether commuting a small pension is interesting. You will receive a message from us about whether commutation is possible. Do you have multiple pension schemes? Then we will examine the possibility of commutation for each scheme.

• Lower pension income. If you opt for commutation, the amount remaining for your pension income will be lower. Then you will have to get by with less money per month.
• More tax. Please note that you will also pay tax on the surrender value in the year you have it paid out. Possibly even at a higher rate, for example if your income that year is so high that you end up in a higher tax bracket.
• Loss of entitlement to benefits. Are you currently receiving benefits? If you opt for a lump sum, the amount you receive will be added to your annual income. Due to this temporarily higher annual income, you may lose your entitlement to benefits such as housing and healthcare allowances, either partially or completely.

You will receive a commutation offer for the small pension 6 months before your retirement date. If you opt for commutation, you will not receive a monthly pension income, but the net value of the small pension. This commutation value counts as income in the year you receive the commutation amount. In addition, your pension income after commutation will be slightly lower.

Zwitserleven is required to withhold wage tax on the amount you receive from the commutation of the small pension. We transfer this wage tax to the Tax and Customs Administration. You will receive an annual statement from Zwitserleven. This statement shows how much wage tax has been withheld on the commutation of the small pension. This annual statement is intended for the income tax return for the year in which the commutation took place.

Are you receiving or will you receive a pension income from Zwitserleven in the same calendar year? Then Zwitserleven is obliged to withhold a contribution for the Health Insurance Act (ZVW) on the gross value of the small pension. The amount of the contribution depends on your income.

• You are currently receiving a pension income from Zwitserleven.
  • The income-dependent contribution for the Health Insurance Act (ZVW) is directly withheld up to a maximum contribution per month. If the maximum has already been reached for that month and the income-dependent contribution for the ZVW has not yet been fully withheld? In that case, we will deduct it from the pension income in the following month(s) of the same calendar year. The future net pension income in the same calendar year may temporarily be lower as a result. This will continue until the full income-dependent contribution for the ZVW on the commutation amount has been paid. If your pension income is lower than the maximum contribution per month? Then you will temporarily receive no pension income until the full income-dependent contribution for the ZVW has been paid.
• You will receive a pension income from Zwitserleven at a later date in the same calendar year.
  • On the surrender value of the small pension, we must then withhold the income-dependent contribution for the Health Insurance Act (ZVW). We deduct this from the pension income of the same calendar year. Here too, we take into account a maximum contribution per month. This may mean that you temporarily receive a lower net pension income until the full income-dependent contribution for the ZVW has been withheld. Is your pension income lower than the maximum contribution per month? Then you will temporarily receive no pension income until the full income-dependent contribution for the ZVW has been paid.