A settlement agreement (VSO) has more consequences than simply a redundancy payment. Pension is one of the most important employment benefits, yet it often receives too little attention when negotiating a settlement agreement. In this article, you can read about what happens to your pension accrual, how redundancy pay relates to it, and what you as an employee should watch out for before signing.
Pension accrual stops on the end date
As soon as your employment formally ends, your pension accrual with your current employer also stops. The pension you have built up to that point remains with the pension fund or pension insurer and will be paid out at retirement age. However, every month during which you do not accrue pension will, in due course, affect the amount of your eventual pension payment.
Important to know: if you are released from your duties but formally remain employed until a later date, pension accrual continues until that later end date — not until the day of signing. Always check that date in your settlement agreement carefully, as this is a common source of error.
What redundancy pay has to do with this
With a settlement agreement, you have no automatic statutory right to a redundancy payment. Nevertheless, in most cases an employer will offer a severance payment at least equal to the statutory redundancy payment. In 2026, the maximum statutory redundancy payment is €102,000 gross. If your annual salary exceeds this amount, your gross annual salary serves as the maximum.
What many employees do not realise is that with a settlement agreement, this statutory maximum does not apply as an absolute ceiling on the payment. You can therefore negotiate a higher severance payment than the statutory redundancy payment. That additional amount can then be used in part to compensate for missed pension accrual — but this must be actively discussed and recorded.
Through a settlement agreement, you and your employer can make specific arrangements regarding pension-related compensation. This might include an additional payment for missed contributions or the continuation of pension contributions during a transitional period after the termination date.
Consequences for survivor’s pension and incapacity for work
Pension involves more than just your own retirement provision. Many pension schemes also include a survivor’s pension and additional cover in the event of incapacity for work. If the survivor’s pension is insured on a risk basis, the cover will in principle lapse on the day your employment ends. This can have serious consequences for your partner or family.
Furthermore, many pension scheme rules provide for premium-free accrual of old-age pension during incapacity for work, but this entitlement is often linked to receiving a WIA benefit. The waiting period for this is 104 weeks. If your employment ends earlier — for example through a settlement agreement — you risk losing out on these additional entitlements.
The Future Pensions Act and the settlement agreement
Since the Future Pensions Act (Wet toekomst pensioenen — Wtp) came into force on 1 July 2023, there is an additional point of attention when concluding a settlement agreement. As a result of the pension transition, some employees are entitled to compensation upon leaving employment — but that entitlement may lapse if the employment ends earlier. Anyone who signs a settlement agreement without being aware of this could face an unpleasant surprise afterwards.
Plan een vrijblijvend gesprek en ontdek wat we voor je kunnen betekenen.
Plan een gesprekIt is advisable to check, before signing, whether you are eligible for compensation under the Wtp and, if necessary, to have this explicitly recorded in the settlement agreement. Any ambiguity on this point could later give rise to a dispute about the validity of the agreement.
Practical tips for your pension with a settlement agreement
- Check the end date in the settlement agreement: pension accrual continues for as long as you are formally employed, not until the day you are released from your duties.
- Ask your pension fund or pension insurer for an overview of the consequences of leaving employment for your specific scheme.
- Negotiate an additional payment for missed pension accrual, particularly if you still have a number of years to go before reaching retirement age.
- Check whether your survivor’s pension is insured on a risk basis and what the cover is after the end date — and discuss a run-off period if appropriate.
- Find out whether you are entitled to compensation under the Future Pensions Act and have this recorded in the settlement agreement.
- Always have the settlement agreement reviewed by an employment lawyer before you sign — even if your employer offers a legal costs budget.
Recording pension arrangements in the settlement agreement
The settlement agreement is not merely a termination document; it is an agreement in which you can ensure that all the consequences of your departure are properly addressed. This applies to pension as well. Make sure the settlement agreement explicitly states which pension entitlements you have accrued, what will happen to the survivor’s pension, and whether any additional arrangements have been made regarding compensation or the continuation of contributions. Vague wording can cause problems later — both for you and for your employer.
Bear in mind too that the pension agreement as such continues to exist alongside the terminated employment contract. The rights and obligations arising from it do not automatically disappear upon signing the settlement agreement. This makes it all the more important to give the matter careful consideration.
Why Arbeidsjurist Eindhoven
At Arbeidsjurist Eindhoven, we understand that a settlement agreement is about more than just a financial payment. Your pension, your future and your financial security are all at stake. We help employees in Eindhoven and across Brabant to fully understand the content of a settlement agreement — including the pension aspects that are often overlooked in standard reviews. Feel free to contact us with no obligation; we would be happy to look at your situation together.
Frequently asked questions
Does my pension accrual stop as soon as I sign the settlement agreement?
No, your pension accrual continues for as long as you are formally employed. If you have been released from your duties but do not leave employment until a later date, you will continue to accrue pension up to that end date. Always check the end date in your settlement agreement carefully.
Can I arrange in the settlement agreement for my employer to continue paying pension contributions?
Yes, that is in principle possible. A settlement agreement can include specific arrangements regarding the continuation of pension contribution payments or an additional payment for missed pension accrual. Whether and how this is achievable depends on your specific situation and the pension scheme. Seek advice from an employment lawyer on this matter.
Does the amount of my redundancy payment affect my pension?
Not directly. The redundancy payment is a severance payment intended to compensate for the loss of employment. You can use part of it to top up missed pension accrual, but that is your own choice. What is relevant, however, is that with a settlement agreement you can negotiate a higher payment than the statutory redundancy payment, with pension compensation forming part of the negotiations.
What happens to my survivor's pension if I sign a settlement agreement?
If your survivor's pension is insured on a risk basis, the cover will in principle lapse on the day your employment ends. This can have serious consequences for your partner or family. Before signing, check with your pension fund or insurer what the exact consequences are and whether a run-off period is possible.
What is the connection between the Future Pensions Act and my settlement agreement?
Since the Future Pensions Act (Wtp) came into force in July 2023, some employees are entitled to compensation as a result of the pension transition. An employee who signs a settlement agreement and thereby leaves employment may lose this entitlement to compensation without realising it. It is sensible to discuss this point before signing and, where applicable, to have it recorded in the settlement agreement.
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.
