Insurope - Network Partner: Company Profile

our Network Partner in the Netherlands

Delta Lloyd Levensverzekering NV

Delta Lloyd is one of the major insurance companies in the Netherlands.

In Life Assurance as well as in General Insurance, Delta Lloyd is in the top five in the Netherlands. The name of Delta Lloyd has been familiar for more than 30 years, but our predecessors from the year of our foundation in 1807, Amstleven, Hollandse Sociteit and Nedlloyd to name but a few, have a history of 200 years. Because of its size and history Delta Lloyd has built an outstanding knowledge and experience as a provider of employee benefits and is able to provide creative tailor-made plans and professional advice.

In 1974 Delta Lloyd became part of the international insurance group Commercial Union Assurance, whose stocks are traded on the London and Paris stock exchanges. The insurance group merged with General Accident and later on with Norwich Union to become CGNU, followed by the new name AVIVA.

Delta Lloyd, a reliable organisation
Delta Lloyd is a modern and solid assurance company with an eye to your needs. This all-finance institution with 6.500 employees, has divisions in the Netherlands, Belgium and Luxembourg (Benelux) and Germany. In the Netherlands the Delta Lloyd group has been enlarged with Delta Lloyd Care for medical insurances and Ohra direct writers since October 1, 1999. By the end of 2002 a joint venture was set up between Delta Lloyd and ABN-AMRO Insurances to sell insurance products through ABN Amro's retail banking branches in the Netherlands.

With Delta Lloyd you can arrange any insurance package for almost any risk. From liability to transport, from fire and consequential loss to health insurance and disability. What applies for these insurances also applies to the pension assurances of Delta Lloyd; they are all flexible enough to fit any situation. 60% of the turnover of the Delta Lloyd group is derived from life insurance, asset management and bank activities, 15% from care insurance and 25% from non-life insurance. Total 2006 turnover for the group has been 8.2 billion with a balance sheet total of 400 billion. Net profit over 2006 has been 711 million. Delta Lloyd occupies a prominent place in the pension market. More than 2000 employers have placed their pension provisions of about 260.000 people with Delta Lloyd.

AVIVA
Delta Lloyd is part of the world-wide operating insurance group AVIVA, a top-5 insurance company in Europe based in London and operating in more than 80 countries.

International pension network
Delta Lloyd has been the exclusive Dutch partner of the Insurope network and member of the Insurope Executive Committee since 1972. Part of AVIVA, Delta Lloyd knows what is going on in the international world of insurance. For multinational pooling arrangements Delta Lloyd works closely together with our world wide Insurope partners. This experience with multinational pooling and the services of Delta Lloyd's international benefit specialists have benefited hundreds of multinational clients and their brokers and consultants. In principle, all group-life and group-medical products can be pooled with the Insurope network.

Delta Lloyd Employee Benefits
Delta Lloyd's Employee Benefits package meets a growing demand for individual provisions, but with the advantages of a group arrangement. It is a package of benefits to the employee that will also benefit you as an employer: coherent insurable terms of employment, simple administration and clear communication. The Employee Benefits package could consist, for example, of ANW-gap insurance (additional survivors' benefits), group accident insurance, ARBO Services (Working Conditions and Health Act service), golden handshake arrangements or a Personal Benefits Statement. With a Personal Benefits Statement all benefits are stated and clearly explained to the individual employee.

Pensions: usually tailor-made
In the Dutch market Delta Lloyd is known by brokers, consultants and clients for its wide range of flexible products. As a prominent and leading player in the group-life market Delta Lloyd offers a variety of encompassing Defined Benefit and Defined Contribution products. Delta Lloyd is specialised in pension plans for employees in enterprises and institutions; small and large enterprises with national and international operations. Pension constructions have to meet the specific requirements and wishes of companies. Delta Lloyd Group Life can take care of that. We have a lot of expertise for finding an answer to any question. Made to measure, just a matter of consultation and professional advice.

Delta Lloyd Group Life
Delta Lloyd Group Life executes administration and management of pension plans with care and expertise. As part of Delta Lloyd NV, Delta Lloyd Group Life specialises in pension plans for employees working for companies and institutions, large and small, operating nationally or internationally, profit or non-profit.

As Delta Lloyd has a prominent position in the market, the client will benefit greatly due to:

a flexible and easy risk acceptance policy;
low group tariffs and good investment results;
support in executing the pension plan;
great expertise offered by our specialised staff;
the possibility of extensive presentation and information to employees;
full information about the latest developments in pensions can be provided quickly;
a dynamic and reliable organisation.

Banking services
Apart from insurance activities, Delta Lloyd also develops banking activities since 1992 so as to be able to offer their clients a total package of financial services. The banking division includes several banks in the Benelux and in Germany.

Institutional investor
With a capital in excess of 61 bln (= Assets under Management), Delta Lloyd is a meaningful party in the investment market. Delta Lloyd has 11 investment funds that are listed at the stock market.

Why choose Delta Lloyd?
Companies trusting Delta Lloyd to execute their pension plans will be informed about the latest developments in the field of pensions. We organise major seminars twice a year, in which the latest developments concerning pensions as well as fiscal aspects are discussed. In addition, we send our customers our free periodical 'Tendensen' and specific newsletters to inform them about the latest trends and developments in the field of pensions.

Product range:
Due to our knowledge and long experience we have developed a broad and exceptional product range thanks to which we rank second in the Dutch insurance industry.

Innovation:
Delta Lloyd is one of the two most innovative insurance companies in the Netherlands. Delta Lloyd is one of the first assurance companies to introduce a pension assurance to replace (non-insured) early retirement schemes. It plays a leading role by developing extremely flexible investment insurances for private individuals as well as for companies. Delta Lloyd is also a front-runner in offering total solutions for insurable fringe benefits and controlling absence due to illness.

Service:
Delta Lloyd has a good reputation in rendering service. Service is not just about a flawless and speedy administration, but also about a quick response to the customer. Delta Lloyd is an obvious partner for enterprises that administer their own plans and provisions. For large companies with a self-administered pension fund or an industry wide pension fund, Delta Lloyd can provide risk- reinsurance and asset management, if desired. When enterprises use Delta Lloyd asset management services they can benefit from Delta Lloyd's know-how in respect of investments and from the position of Delta Lloyd as an institutional investor.

Investment performance:
Delta Lloyd has great experience in managing capital investments, which can be found in our extensive product range (for example the pension savings module). The character of pension assurances is that it has a long-term perspective, a quality befitting our investment performance.

Expertise:
Delta Lloyd is a major insurer and has therefore gained great expertise in many areas enabling it to accommodate the wishes of its customers.

local language

Pensioenen in Nederland

Algemeen

Het systeem van de toekomstvoorzieningen in Nederland berust op drie pijlers, namelijk:

¨i Eerste pijler: de basisvoorziening voor de gehele bevolking in Nederland (AOW).

¨i¨i Tweede pijler: de pensioenvoorziening in de relatie werkgever � werknemer. De tweede pijler wordt voorzien door:

2.1 Verplichte bedrijfstakpensioenfondsen (68 fondsen � 5.450.000 werknemers)
2.2 Ondernemingspensioenfonden (800 fondsen � 802.000 werknemers)
2.3 Restant grotendeels door particuliere levensverzekeraars

De eerste twee partijen hebben 80% van de markt in de tweede pijler in handen.
Het belegd vermogen van deze pensioenfondsen bedraagt tussen 400 en 500 miljard Euro, afgezet tegen het totaal aan belegde pensioengelden van ca. 600 miljard Euro in Nederland. Belangrijk is dat de Wet Verplichtstelling Bedrijfstakpensioenfondsen ervoor zorgt dat bedrijven verplicht worden om hun pensioenverzekeringen bij het bedrijfstakpensioenfonds onder te brengen. Het is niet mogelijk gemaakt om hiermee te concurreren.

De levensverzekeraars voeren dus ongeveer 20% uit van de collectieve pensioenregelingen alsmede het grootste gedeelte van individuele pensioenregelingen in de priv�-sfeer.

¨i¨i¨i Derde pijler: de individuele toekomstvoorzieningen in de priv�-sfeer.

Binnen dit 3-pijler systeem wordt voorzien in een viertal behoeftes:

Voorzieningen bij ouderdom
Voorzieningen bij overlijden (= nabestaandenvoorzieningen)
Voorzieningen bij arbeidsongeschiktheid
Voorzieningen bij werkloosheid

Wij zullen ons hieronder beperken tot de aspecten: ouderdom, overlijden en arbeidsongeschiktheid binnen de eerste twee pijlers.

1. Ouderdom

¨i 1.1 Eerste pijler:

Algemene ouderdomswet (AOW)
De AOW is een bodemvoorziening voor alle ingezetenen (voor echtpaar vanaf 65 jaar ca. � 12.000,-- per jaar) voor de noodzakelijke kosten van levensonderhoud na het 65^e jaar, zodat men niet meer door middel van arbeid in het inkomen hoeft te voorzien. Iemand die voldoende AOW heeft opgebouwd hoeft geen beroep op de bijstand te doen, omdat de AOW een uitkering op minimumniveau garandeert. Daarnaast is het de basis voor de pensioenvoorziening in de relatie werkgever - werknemer.

De AOW bestaat sinds 1957 en is een volksverzekering. Dat wil zeggen dat iedereen die geldig in Nederland verblijft tot de kring van verzekerden behoort en over het inkomen premie betaalt, of men dat nu wil of niet.

De AOW wordt gefinancierd door een omslagstelsel. Dit betekent dat alle verzekerden onder de 65 jaar door premiebetaling de kosten van de AOW-uitkeringen voor de mensen boven de 65 jaar opbrengen. Mensen onder de 65 jaar �sparen� dus niet voor hun eigen AOW, maar betalen voor de mensen die al 65 of ouder zijn.

De AOW kent een opbouwsysteem. Iemand die is verzekerd voor de AOW bouwt per jaar 2% AOW-pensioen op. Op die manier komt men in 50 jaar, van het 15^e tot het 65^e levensjaar, aan 50 verzekerde jaren en dus aan een volledige AOW-uitkering. Iemand die geen 50 verzekerde jaren heeft - bijvoorbeeld vanwege wonen in het buitenland - wordt voor ieder niet-verzekerd jaar met 2% gekort op de uitkering. Overigens bestaat de mogelijkheid voor een tijdelijke vrijwillige verzekering voor de jaren waarin men in het buitenland woont. Als men van die mogelijkheid gebruikmaakt, is men ook voor de buitenlandse jaren verzekerd, en vindt derhalve geen korting van de uitkering plaats.

De ouderdomspensioenen worden afgeleid van het nettominimumloon. Voor een alleenstaande is het netto-ouderdomspensioen per maand gelijk aan 70% van het netto minimumloon per maand. Voor paren is het netto-ouderdomspensioen per maand gelijk aan 2 x 50% (=100% samen) van het netto minimumloon per maand. Voor een echtgenoot/ partner die nog geen 65 jaar is, heeft een pensioengerechtigde mogelijk recht op een toeslag, maar het inkomen van de partner is van invloed op de hoogte van de toeslag. De AOW-gerechtigde die op of na 1 januari 2015 de leeftijd van 65 bereikt en een jongere partner heeft, kan geen aanspraak meer maken op een AOW-toeslag.

�i�i 1.2 Tweede pijler:

Ouderdomspensioen in de relatie werkgever- werknemer
Een ouderdomspensioen ziet toe op de verzorging van werknemers en gewezen werknemers bij ouderdom. In de per 1 juli 1999 ingevoerde pensioenwetgeving komt echter geen minimumpensioenleeftijd meer voor, zodat werkgever en werknemer onderling kunnen afspreken wat de pensioeningangsdatum wordt. Deze datum moet wel in de pensioenbrief of pensioenregeling worden vastgelegd.

Met ingang van 1 september 1995 tot de invoering van de nieuwe pensioenwetgeving per 1 juni 1999 wordt een uittredingsleeftijd van 55 jaar, ongeacht de aard van de functie, in beginsel fiscaal acceptabel geoordeeld. Een uiterste uittredingsleeftijd van 70 jaar is toegestaan. Voor de volledigheid zij er op gewezen dat volgens het Burgerlijk Wetboek door een werkgever geen onderscheid mag worden gemaakt tussen mannen en vrouwen, onder meer op het gebied van de arbeidsvoorwaarden en de be�indiging van de arbeidsovereenkomst.

De werkgever is vrij om een pensioentoezegging te doen of niet, maar als er een toezegging wordt gedaan dan moet deze voldoen aan de belastingwetten PSW.

De Wet op de loonbelasting bepaalt dat aanspraken, die berusten op een pensioenregeling, niet tot het loon behoren. Wel worden de latere pensioenuitkeringen � op basis van de zogeheten "omkeerregel� belast. Ook de bedragen die van de werknemer worden ingehouden als bijdrage ingevolge een pensioenregeling behoren niet tot het loon. De latere pensioenuitkeringen die de eigen bijdrage van de werknemer oplevert, zijn daarentegen wel belast.

Ouderdomsoverbruggingspensioen
Een ouderdomsoverbruggingspensioen wordt onder de nieuwe regelgeving ook als een pensioenregeling aangemerkt. Het ouderdomsoverbruggingspensioen is een regeling die het ouderdomspensioen aanvult in verband met het ontbreken van AOW-uitkeringen v��r de 65-jarige leeftijd en het verschil in verschuldigde premie voor de volksverzekering AOW v��r en na de 65-jarige leeftijd. Het ouderdomsoverbruggingspensioen gaat in op hetzelfde tijdstip als het ouderdomspensioen en eindigt uiterlijk bij het bereiken van de 65-jarige leeftijd.

Prepensioenregeling
Een prepensioen is een pensioen dat niet eerder ingaat dan bij het bereiken van de 60-jarige leeftijd. Daarbij mag een prepensioen niet later ingaan dan bij het bereiken van de in de pensioenregeling vastgestelde ingangsdatum van het ouderdomspensioen dan wel het eerder be�indigen van de dienstbetrekking op of na de in de prepensioenregeling vastgestelde ingangsdatum. Het prepensioen dient uiterlijk bij het bereiken van de 65-jarige leeftijd te eindigen. De opbouw van het prepensioen kan in tenminste tien jaren onmiddellijk voorafgaande aan de ingangsdatum van het prepensioen plaatsvinden. In beginsel mag het prepensioen niet op een hoger niveau uitkomen dan 85% van het laatstgenoten salaris. Bij de hantering van de maximale opbouwpercentages moet wel rekening worden gehouden met een eventueel eerder ingegaan ouderdomspensioen, een overbruggingspensioen en VUT-uitkeringen. Wanneer het prepensioen eerder ingaat dan bij het bereiken van de 60-jarige leeftijd dient het actuarieel herberekend te worden, waarbij het prepensioen met inbegrip van een overbruggingspensioen en VUT-uitkeringen niet boven 100% van het pensioengevend loon mag uitkomen.

2. Overlijden en verzorging van nabestaanden

¨i 2.1 Eerste pijler:

Algemene Nabestaandenwet (ANW)
De ANW is net als de AOW een volksverzekering. De ANW wordt gefinancierd door premies. Die worden betaald door alle verzekerden, ongeacht de leeftijd.

De ANW dekt het risico van overlijden van de partner en van de ouders. De nabestaande krijgt echter alleen een uitkering als hij aan bepaalde voorwaarden voldoet. De hoogte van de uitkering is afhankelijk van het inkomen van de nabestaande. De ANW is een risicoverzekering, en geen opbouwverzekering zoals de AOW. Dat betekent dat als het risico zich voordoet (de verzekerde overlijdt), de nabestaande een uitkering krijgt als zij/ hij aan de voorwaarden voldoet. Het is niet van belang hoelang men al verzekerd is geweest. Wel is het zo dat iemand die ook buitenlands nabestaandenpensioen krijgt een gekorte ANW-uitkering kan krijgen.

Rechthebbenden nabestaandenuitkering
De volgende groepen hebben recht op een nabestaandenuitkering:

nabestaanden met een ongehuwd kind onder de 18 jaar. Indien een vrouw zwanger is op de dag van overlijden van haar partner, heeft zij ook recht op ANW-uitkering;
arbeidsongeschikte nabestaanden (dat wil zeggen zij die meer dan 45% arbeidsongeschikt zijn verklaard); de arbeidsongeschiktheid moet ten minste drie maanden duren;
nabestaanden die geboren zijn voor 1950.

De nabestaandenuitkering eindigt als:

de nabestaande 65 jaar wordt;
de nabestaande hertrouwt of gaat samenwonen;
Het (jongste) kind 18 jaar wordt of tot het huishouden van een ander gaat behoren;
de nabestaande niet langer arbeidsongeschikt is.

Halfwezenuitkering
Naast de nabestaandenuitkering kan de ANW recht geven op een halfwezenuitkering. Recht op halfwezenuitkering heeft de ouder of verzorger van een halfwees die dit kind in zijn huishouden opneemt. Een halfwees is een kind jonger dan 18 jaar met ��n ouder, waarvan de andere ouder is overleden.

Wezenuitkering
De ANW geeft ook recht op een wezenuitkering. Recht op een wezenuitkering hebben volle wezen (dat wil zeggen kinderen van wie beide ouders overleden zijn) die jonger zijn dan 16 jaar. Het recht op wezenuitkering eindigt als het kind wordt erkend, gewettigd of geadopteerd.

typical benefit plan

General

The system of social security legislation in the Netherlands is based on three pillars:

1. First pillar: a basic provision for all Dutch citizens (General Old Age Pension Act (AOW))

2. Second pillar: pension scheme via the employer. The second pillar is covered by:

2.1 Compulsory industry-wide pension funds (68 funds � 5,4500,000 employees)

2.2 Company pension fund (800 funds � 802,000 employee

2.3 Remainder: mainly private pension funds;

2.1 and 2.2 together cover about 80% of the market.

The assets in pension funds amount to approximately � 400 to 500 billion. Including other arrangements approximately � 600 billion. An important fact is that the Compulsory Industry-wide Pension Fund Act provides that such companies have to place their pension assurances with such pension fund. Competition is not possible.

Hence, insurance companies carry out about 20% of the group pension plans as well as the major part of the personal pension provisions.

3. Third pillar: supplementary personal insurance arrangements (life annuity, pension etc.).

This tree-pillar system covers some four needs:

1. Old age needs

2. Death needs (= survivors provisions)

3. Disability needs

4. Unemployment needs

Herebelow, we will concentrate on the following issues: old age, death and disability within the first two pillars.

1. Old Age

1.1 First pillar:

General Old Age Pension Act (AOW)

The AOW is a basic provision for all inhabitants (approximately � 12,000 per year for a couple over 65) providing the necessary benefit for the cost of living, when income is no longer generated by labour. Anybody having accrued enough AOW does not have to appeal to social security, because the AOW guarantees a benefit at a minimum level. The benefit may be supplemented by a pension provision generated through an employer-employee relationship.
The AOW has existed since 1957 and it is called a national insurance because any person staying in the Netherlands is an insured in this respect, provided he/she pays a compulsory premium rate over the wages.

The AOW is funded by means of a pay-as-you-go-system: all insureds under 65 pay a premium for the cost of the current AOW benefits for people over 65. So, people under 65 do not save for their own old age, they pay for people who have already reached the age of 65.

The AOW is an accrual system: 2% is accrued per annum. In this way one may accrue a full pension in 50 years (from 15 to 65). Anybody not having met 50 years � for instance because of living abroad � is cut back by 2% per annum. For that matter, one may take out an insurance voluntarily for the years abroad.

Old age pension benefits are based on the net minimum wages. A single person receives 70% of the net minimum wages per month. For couples, this is 2 x 50% = 100% of the net minimum wages a month. For spouses/partners under 65, an eligible old age pensioner may be entitled to a temporary allowance, but the partner's income affects the level of the benefit. Eligible persons for the AOW who will be 65 after 2015 and who have a younger partner, will no longer be entitled to an AOW extra allowance.

Second pillar:

Retirement pension for employed persons

Retirement pension provides a benefit for employees and former employees at a certain (old) age. New legislation introduced in the Netherlands in 1999 does no longer mention a minimum age; employers and employees may together decide on a target retirement date. Such date should be mentioned in a pension letter or pension plan.

In the period between 1 September 1995 and the introduction of this new pension legislation on 1 July 1999, a retirement age of 55 was accepted. The final age is 70. The Dutch Civil Code provides that no distinction may be made between men and women when it concerns terms of employment and the termination of a labour contract.

The Wages and Salaries Tax Act provides that rights on account of pension plans are no income component, the pension benefits are. Amounts reduced from the employee's income as a contribution to the pension plan are no salary, later pension benefits generated by the employee's contribution are subject to taxation on the other hand.

Bridging pension

Bridging pension is a scheme to supplement retirement pension in connection with the lack of AOW benefits in the period before age 65 and the difference in premiums due for national insurance AOW before and after age 65. Bridging pension starts at the same time as the retirement pension and ends not later than age 65.

Pre-Pension plan

Pre-pension takes effect before the retirement date agreed upon in the pension plan. Pre-pension should end before the age of 65. Pre-pension may accrue in at least 10 years immediately preceding the pre-retirement date. The benefit shall not exceed 85% of last earnings. Account must be taken of earlier retirement, bridging pension and early retirement benefits.

2. Death and survivors benefits

2.1 First pillar:

General Survivors Act (ANW)

Like the AOW, the ANW is a national insurance. The act provides a right to survivors' benefit for men and women whose spouse or partner has died. It provides a right to a benefit for children as well. The ANW is funded by premiums which is paid by all insureds, irrespective of age.

Certain conditions must be met. The amount of the benefit is subject to the survivor's income. The ANW is a risk insurance, it does not accrue like the AOW. The amount of the benefit may be affected by similar benefits received from countries other than the Netherlands.

Who has a right to survivors' benefit?

- Survivors with unmarried children under 18. If a woman is pregnant on the day of her partner's death, she is entitled to an ANW benefit as well

- Disabled survivors (at least 45% and during at least 3 months)

- Survivors born before 01-01-1950.

The survivors' benefit ends when:

- a survivor turns 65

- the survivor gets married or starts a shared household

- the (youngest) child turns 18 or is belonging to another household

- the survivor is no longer disabled

- the survivors� income reaches the level of � 2001,87 per year.

Semi-orphans' benefit

In addition to survivors' benefit, the ANW may also grant a right to semi-orphans' benefit. A right to this benefit exists when a semi-orphans' parent or carer takes the child in his household. A semi-orphan is a child under 18 with only one parent, the other having died.

Orphans' benefit

The ANW grants orphans' benefits as well. This right exists for under-16s whose both parents have died. The right to orphans' benefit ends when the child is adopted, acknowledged or legitimised.

2.2 Second pillar:

Survivors' pension within the relation employer - employee

Survivors' pension provides for the partner of the (former) employee after the latter's death. Although a retirement pension (including bridging pension) and a disability pension also provides for a partner (and children), the partner (and the child) has no independent right to such retirement or disability pension. In the event of divorce, only the (former) employee has a right to a full retirement or disability pension. A (former) partner may have a right to a certain part of the former partner's pension right.

Survivors' bridging pension

This is a scheme to supplement survivors' or orphans' pension for the lack of an ANW benefit and the difference in premiums due for national insurances for pensions before and after age 65.

ANW-Gap assurance

The General Widow s' and Orphan s' Act (AWW) was replaced by the ANW in 1996, which resulted in a reduced benefit. The ANW gap is the amount which lacks because the conditions of an ANW benefit are not met. The lack of pension up to the moment the surviving partner is 65 is covered by an ANW benefit. Such an insurance is generally offered by employers as a group contract, but effected individually.

3. Disability

3.1 Fist pillar:

WAO � Invalidity Insurance Act

The WAO is to be categorised as �Social security provision� and therefore is part of the first pillar. The WAO provides insurance for employees who have been disabled for a period in excess of one year. The WAO is for employees under 65. The premium for the WAO is subject to a disability risk in an enterprise or industry. Premium is paid by the employer.

Conditions

A right to a WAO benefit exists when en employee is disabled for at least 15%, and the disability has lasted for 52 weeks or more. The employer shall continue paying wages during this 52 week period.

Amount of the WAO benefit

The Dutch Government has tried to reduce the number of people receiving a WAO benefit by introducing the so called WAO Gap in 1993. Virtually all employees receive 100% of their wages in the first year of disability. After this first year, the employee is transferred to the scope of the WAO. The amount of the benefit is now subject to age and former salry.

The WAO benefit consists of a loss of income benefit based on the daily wages (the income the employee could have earned per day in the year preceding his disability) up to a certain maximum, and a follow-up benefit. The loss of income benefit is 70% of the last earnings up to a certain maximum. The duration period of the loss-of-income-benefit depends on the employee's age but is limited to six years. After the loss of income benefit period, the employee will receive up to 70% of the minimum wages, increased by a follow-up benefit. The relapse for the employee from 70% of his earnings to the follow-up benefit is called the WAO Gap. The follow-up benefit is paid until age 65.

3.2 Second pillar:

Disability pension for employees

Disability pension is meant for employees and former employees in the event of disability. It may never exceed socially reasonable amounts. The level is determined by the degree of disability. In practice, there is a relation with the degree of disability for the WAO. The pension is for people mainly who earn in excess of the maximum wages for employee insurances. The right to a WAO benefit shall be converted into a disability pension, so that it is given the element of an additional WAO benefit. Some pension plans provide for a full or partial supplement of the WAO Gap.

Types of pension plans for employees

Legislation since 1999 makes is possible to distinguish between three types of pension plans: final pay system, average pay system and defined contribution system. Basis is pension accrual in 35 years. 70% of the last earnings including AOW is generally considered an adequate pension benefit.

Pension commitments may be distinguished into :

- Salary / years of service scheme

- Defined contribution scheme

- Fixed amounts scheme

- Combination

Salary / years of service scheme final pay and average pay

Final pay system

The amount of the pension benefit is related to the years of service. Service means: the period from the commencement of the employment until the retirement date. The amount of the final pension is a percentage of the last pensionable

salary (this used to be 1.75% per service year for 40 years, hence 70%, but nowadays it is legally possible to accrue in 35 years, hence 2% p.a.).

As a result, increases in pensionable salary have their effect both upon past and future service years. For reasons of budgeting, the average pensionable salary over a period from 5 to 10 years prior to the retirement date usually defines the pension.

Advantage

The best possible pension accrual; when salaries continue to increase, the pension is based on the last earnings.

Disadvantages

- In the event of a salary reduction, the pension is adjusted to the lower pensionable salary. Such decrease often

refers to future years only, past years are guaranteed.

- When pensionable salaries change at later age, pension costs may become uncontrollable

- When employees leave the service, time proportional pension rights must be financed by employer; this concerns
the total pension rights on the basis of the last earnings, less the pension rights relating to the period from
resignation to retirement.

Average pay system

The level of the pension right is related to the pensionable salary and the length of the service. A certain percentage of the pensionable salary accrues annually to calculate pensions. As a result, increases in pensionable salary have their effect only upon future years of service. As there is no past service, old pension rights remain unchanged, except a possible adjustment on account of a general wage or price index. The maximum accrual percentage for an average pay system can therefore be slightly higher than for the final pay system, namely 2.25% p.a.

Average pay systems are generally less favourable for employees with sharply rising careers.

Advantages

- The cost of average pay systems can be well controlled as major salary rises affect future years only.

- Salary reductions later in careers have a smaller impact upon the eventual pension.

- When the employee leaves the service time proportional pension rights do not have to be funded.

Disadvantages

No full pension accrual, especially when salaries rise at later age. This may be offset somewhat by indexation of pension rights.

Defined contribution system

Starting point for the determination of the pension rights in this system is the available financial means. As special attention is paid to the cost of the plan, the employer can easily manage and budget expenditure.

The premium that has to be reserved for the pension accrual by the employer is age-related to the employee. If the premium is derived from the salary or pensionable salary, rising wages will result in higher premiums. At the retirement date, the accrued capital has to be used � by fiscal law � to assure a life-time old age pension.

Advantages

- A defined contribution system is very well controllable by the employer.

- When the pensionable salary falls, post service pension rights are not affected.

- 70% of final pay is possible aim in a defined contribution system.

- employee is beneficent of the return on investments.

Disadvantages

- Full pension accrual may not take place for older employees with late careers

- In the event of marriage, cohabitation or addition to the family, survivor benefits and/ or (semi-)orphans� benefits may have to be funded from the same premium.

- The eventual pension is not exactly predictable, the available pension is known at the retirement date.

- The return on investments of the annual premium deposit is for risk of the employee.

Fixed amount system

This is a scheme in which a fixed amount is allotted on the basis of a certain period of membership, subject to the salary level.

Advantages

- Plain and simple.

- Salary rises do not affect the pension amounts. The employer knows exactly what the scheme costs.

- In the event of discharge: no time proportional pension rights funded.

Disadvantages

- Fixed amounts decrease in value in the course of time.

- Salary increases do not affect the amount of the pension (disadvantage for employee).

- For employees joining the scheme at different ages, the scheme cannot possibly be adequate to the same extent.

- Benefits acceptable to young employees may be inadequate for older employees.

- Benefits acceptable for older employees may lead to high pension rights for younger employees. The pension commitment may become in excess of taxation rules.

Flexible elements

a. Voluntary pension contributions

In the past, compulsory contributions only could be taken from the gross salary. Within the framework of individual and flexible pensions, nowadays voluntary contributions may be deducted as well.

b. Pension premiums via employee savings schemes

Amounts saved in employee savings schemes may be used to pay pension premium in the blocking period.

c. Conversion of retirement and survivors' pension

With increasingly more two-income households, it is logical that some people want their survivors' pension converted into extra retirement pension. After all, the partner has an own pension plan, hence own retirement pension. Survivors' pension may not exceed 70% of the pensionable salary and the maximum survivors' pension to be converted is 50% of the pensionable salary.

d. Purchase of service years

Service years my be purchased with former employers. This must concern service years before 8 July 1994.

e. Part-time pension

Employees may retire part-time. This may result in a partial pension benefit, while the service is continued partially and pension still accrues. When a job is performed part-time in the last ten years before the retirement date, pension accrual may still take place, if the part-time function is at least 50% of the full-time job.

f. Demotion

Employees may be demoted towards a job with lower qualifications and lower salary. If such demotion is made in the ten years preceding retirement, salary received in these ten years may be left out for the calculation of pensions.

g. Fluctuating pension (100:75)

As indicated above, pension benefits may vary, the lower benefit not being less than 75% of the higher benefit, and the extent of the variation being determined at the inception date of the pension. When the 100:75 range is applied, indexation and bridging pension are not taken into account. When the fluctuation leads to a temporarily higher pension on top of the 100% norm, this is acceptable.

Market

The Netherlands are characteristically a broker country. The major part of the individual and private pension schemes (from small and medium sized businesses to large-scale companies) is effected via various types of brokers. Fee consultants, like Mercer, Hewitt, Wyatt etc mainly serve large-scale companies and company pension funds.

Large companies cover about all products demanded by the market, with such supplementary products as income insurance, medical expenses and other general insurance products.

About 40 companies are active in the (semi) group pension market in the Netherlands. The largest companies include:

	Name	Market share (%)	General description
1	Nationale Nederlanden	29	Part of bancassurer ING. Typical market leader. Listed. Member of international network: MIA
2	Aegon	23	Creative from a commercial point of view, large international expansion. Listed. Member of international networks: GAIN, ALLNET
3	Achmea	10	Characteristic direct writer. Member of international network: EUREKO
4	Delta Lloyd	9	Part of AVIVA with own divisions in Belgium and Germany. Fast growth through acquisitions in the past few years. Typical intermediary insurer. Member of international network: INSUROPE
5	Fortis/Amev	7	Part of bancassurer Fortis. Gaining market share. Member of international networks: IGP/John Hancock, INSUROPE and ALLNET
6	Zwitserleven	6	Division of Swiss Life. Limited range of products, mainly Life and pension. Member of international network: Swiss Life
7	Reaal	5	Part of bancassurer SNS. Limited competitor. No member of international network.

It is common practice in the Netherlands to effect contracts for five-year terms. This is one of the reasons why customers do not often change insurer, unless in case of problems or when international benefits can be gained. Swapping one insurers for another may cost much.

Strength/weakness analysis

Nationale Nederlanden, Aegon, Delta Lloyd and Amev are comparable from a product and rating points of view. When it concerns separate accounts for contracts > � 500,000 these are often spread between these insurers.

Strong point for Nationale Nederlanden en Fortis/Amev is their banking power. Companies often have a bank account with them for all their loans and credits. Such bank is used to gain insurance business as well.

Compared to the insurers mentioned first, Achmea and Zwitserleven score less when it concerns administrative performance, but they have well-known brand names.

Delta Lloyd is distinguished by reliability, solvency but also by a flexible attitude with a specialised business unit for the fee consultant and international business. Delta Lloyd also has a wide range of well performing (listed) investment funds and a full range of employee benefits products.

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typical benefit plan

General

Conditions

Amount of the WAO benefit

Advantage

Disadvantages

Disadvantages

Advantages

Disadvantages

Advantages

Disadvantages