Becoming incapacitated for work
You would rather not to think about it; being ill for a long time or becoming incapacitated for work. This may affect your current income and your pension. In most schemes, matters are arranged, as a result of which (a part of) your pension accrual continues. You can read more about it below.
If you are unable to work due to illness, your financial situation will change. You will often still receive your full salary in the first year. In the second year, your income will usually decrease. Are you accruing a pension with a pension provider? Then this continues in the first two years of your illness. Even though it may be less than if you were not ill. This differs per pension scheme. If you do not have a (permanent) job or if you have a temporary contract, it often works differently. In that case, please contact your pension provider.
WIA [Incapacity for work] benefit
If you have been ill for longer than two years, you will be examined by the UWV. They determine whether you are incapacitated for work and the percentage of that incapacity. If you are more than 35% incapacitated for work, you will receive a WIA benefit from the UWV. You do not accrue pension on this benefit.
(Partially) incapacitated for work and pension
If you receive a WIA benefit, your pension accrual often (partially) continues. This is because the pension provider then pays the premium for the part that you are incapacitated for work. This is called a premium exemption in case of incapacity for work. The amount of the non-contributory accrual and the percentage of incapacity at which this applies differs per pension scheme. Therefore, please contact your own pension provider.
Right to an incapacity for work pension
Sometimes your pension provider will give you a supplement to your WIA benefit. This is called an incapacity for work pension. This is also referred to in some schemes as a disability pension. This is a (often) monthly benefit, which usually stops when you reach the AOW age. Ask your pension provider whether this applies to you.
How can you set even more money aside for your pension?
If you did not accrue a pension or you are not entitled to a non-contributory pension, then there are other ways to set money aside, for example:
1. A pension product
You can set aside money with an annuity product at an insurer, bank or investment institution. In many cases, this is tax deductible. Although, your money is locked up for a longer period of time.
2. Saving or investing
If you save or invest money yourself, you can usually withdraw it in the interim. Handy if you need it for something else. You do, however, pay tax on these savings (above a certain level).
3. Mortgage redemption
Do you own a house? Sometimes you can repay the interest-only component of your mortgage more quickly. That way you will have fewer living costs now and when you retire.
Would you like to know more about the consequences of incapacity for work and your pension? Please contact your pension provider(s) or a financial advisor.
