Whether you are entitled to a Transition Payment as an employee around state pension age depends on the precise moment of dismissal: before or after reaching that age. That may sound straightforward, but in practice this distinction gives rise to a great deal of questions and misunderstanding. In this article you can read about when the right to a transition payment does and does not exist, what an important Supreme Court ruling says on the matter, and what to watch out for if your dismissal date falls close to your state pension date.
What the law says about dismissal at or after state pension age
The statutory general rule is clear: if your employment ends because you have reached state pension age, you are not entitled to a transition payment. The reasoning behind this exception is that the transition payment is intended to bridge the financial gap on the way to other work — a step that someone retiring no longer needs to take.
The same applies if you remain in employment beyond state pension age and are subsequently dismissed. In that case too, the right to a transition payment lapses, regardless of how long you continued working after the age of 67. In 2026, the state pension age for most employees is 67.
Continuing to work after state pension age and the consequences for dismissal
More and more people continue working past 67, sometimes because they enjoy it and sometimes because their employer wishes them to. The law gives employers broader options when dealing with state pension-age employees: for instance, they may offer a maximum of six fixed-term contracts over a four-year period before a permanent contract arises. The notice period is also generally shorter than for regular employees.
As regards the transition payment, however, nothing changes for the better: anyone who re-enters employment or continues working after state pension age and is subsequently dismissed also has no entitlement to a transition payment. This applies regardless of the length of the employment relationship after the state pension date.
Dismissal shortly before the state pension date: the Supreme Court is clear
The situation becomes more complex if your employer dismisses you before you have reached state pension age. It was precisely this situation that the Supreme Court addressed in a landmark ruling on 5 October 2018 (ECLI:NL:HR:2018:1845). The case giving rise to that ruling concerned a teacher who was dismissed by his employer on grounds of long-term incapacity for work, whilst he had not yet reached state pension age.
The employer — and initially the cantonal court as well — took the view that it would be unacceptable by standards of reasonableness and fairness to award the full transition payment, given that the employee was about to retire and his loss of income was limited. The Court of Appeal in Den Bosch took a different view and awarded the full payment. The Supreme Court upheld that decision.
The core of the ruling: the transition payment is a flat-rate, statutory payment. The legislature deliberately chose not to include a cap based on income loss, as was previously common under the cantonal court formula. The fact that an employee is close to reaching state pension age or suffers only limited income loss is therefore insufficient grounds to reduce the payment.
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Plan een gesprekWhat this means in practice for you
If you have not yet reached state pension age at the moment of dismissal, you are in principle entitled to the full transition payment, even if your state pension date is only a few months away. Conversely, if your state pension age has already been reached, that entitlement lapses — no matter how long you continued working afterwards.
The maximum transition payment in 2026 is €102,000 gross, or one gross annual salary if that is higher. The amount is calculated on the basis of your years of service and your gross monthly salary: for each full year of service, you accrue one third of a monthly salary.
A few practical points to bear in mind:
- Always check the exact date on which your state pension age officially commences; this is the day itself, not the first of the month.
- Does your employment contract or collective agreement contain a retirement clause? If so, your employment ends by operation of law on your state pension date, without your employer needing to give separate notice.
- Is there no retirement clause? Then your employer must formally terminate the contract if they wish to end it, even when you reach state pension age.
- If you are dismissed before you have reached state pension age — even if the difference is small — you are in principle entitled to the full transition payment.
- Are you receiving a permanent incapacity benefit (IVA) and are you close to state pension age? You may still be entitled to the full transition payment if your employer terminates the employment relationship before your state pension date.
- Always have a settlement agreement checked before you sign, even if you are close to retirement.
What to do if your employer refuses or reduces the payment
Some employers attempt to refuse or reduce the transition payment on the grounds that the employee is about to retire. The Supreme Court’s 2018 ruling makes it clear that this argument has no legal merit as long as the employee has not yet reached state pension age at the time of dismissal. In such a situation, do not simply agree to a lower amount without first seeking legal advice.
Are you unsure whether your employer’s calculation is correct, or are you being pressured to sign something quickly? Take the time to have your rights properly set out so that you can make a well-considered decision.
Why Arbeidsjurist Eindhoven
At Arbeidsjurist Eindhoven, we assist employees in the Eindhoven and Brabant region with questions about dismissal, transition payments, and employment rights. Whether you have just received a dismissal letter, have a settlement agreement in hand, or are uncertain about the amount of your payment: we are happy to think things through with you. Contact us without obligation for an initial conversation — we will explain your position clearly and calmly.
Frequently asked questions
Am I entitled to a transition payment if I am dismissed just before reaching state pension age?
Yes. If you are dismissed before you have reached state pension age, you are in principle entitled to the full transition payment. The Supreme Court confirmed in 2018 (ECLI:NL:HR:2018:1845) that the fact that you are close to state pension age is not a reason to reduce or refuse the payment.
Am I entitled to a transition payment if I continue working after state pension age and am then dismissed?
No. Employees who have reached state pension age and are subsequently dismissed are not entitled to a transition payment. This also applies if you re-entered employment after your state pension date, regardless of how long you worked after that point.
May my employer reduce the transition payment because I am close to retirement?
No, that is not permitted. The Supreme Court made clear in its ruling of 5 October 2018 that the transition payment is a flat-rate payment that is unaffected by impending retirement. As long as you have not yet reached state pension age on the date of dismissal, you are entitled to the full statutory amount.
What is the maximum transition payment in 2026?
The maximum transition payment in 2026 is €102,000 gross. If your annual salary exceeds €102,000, that annual salary serves as the maximum. The payment is calculated on the basis of one third of a monthly salary for each full year of service.
What is the state pension age in 2026?
In 2026, the state pension age is 67. This also applies in 2027. From 2028 onwards, the state pension age will rise to 67 years and 3 months. Your exact state pension date depends on your date of birth and can be looked up via the Social Insurance Bank (SVB).
We are happy to think along with you. For advice tailored to your situation we would gladly sit down with you. No rights can be derived from the content of this page and it may contain inaccuracies.
