Employing pensioners

What it means

Employing pensioners means hiring people who receive an old-age, disability or service pension. A pensioner may work alongside their pension without restriction, under an employment contract or a work agreement, and the pension is generally not reduced as a result.

For contributions, employing pensioners has special rules. An old-age pensioner, for example, does not pay disability insurance or unemployment insurance, and on work agreements with low income may, under statutory conditions, claim an exemption under which only minimal contributions are paid.

For income tax, the pension is not taxed but wages are. A pensioner whose pension exceeds a statutory amount cannot claim the personal tax-free allowance, because in their case it is already covered by the pension.

How it works in practice

When a pensioner starts, we set the insurance type in the payroll system correctly and any contribution exemption on a work agreement. The exemption can be applied to only one agreement a month and if the conditions are met, so we ask the employee for a written declaration.

When the employee signs the tax declaration, we check whether they are entitled to the personal allowance and warn them not to claim it if their pension exceeds the threshold. Otherwise they would owe tax at the annual reconciliation.

We explain to clients that pensioners are valuable employees with experience and flexible availability. Combined with lower contributions on work agreements, they are attractive for seasonal work, cover or expert advice, for example.

What to watch out for

Different rules apply to early retirement pensions: someone receiving an early pension who takes up employment may lose the pension or have to repay it. Before they start, we therefore check what kind of pension it is.

The principle of equal treatment applies to pensioners too. Lower pay merely because of age or receiving a pension is discrimination, and the employee can challenge it.