Settlement Agreement and Pension Accrual What You Need to Know

Settlement agreement and your pension accrual

A settlement agreement (VSO) has wider implications than simply a severance payment. Pension is one of the most important employment conditions, yet it often receives insufficient attention when negotiating a settlement agreement. In this article you can read what happens to your pension accrual, how the transition payment relates to it, and what you as an employee should look out for before you sign.

Pension accrual stops on the end date

As soon as your employment formally ends, pension accrual with your current employer also stops. The pension you have built up up to that point remains held with the pension fund or pension insurer and will be paid out at pension age. However, every month in which you do not accrue pension will, in the long run, affect the amount of your eventual pension payment.

Important to note: if you are released from work but formally remain in employment until a later date, pension accrual continues until that later end date, not until the date of signing. Always check that date carefully in your settlement agreement — this is a common source of errors.

What the transition payment has to do with this

In the case of a settlement agreement, you have no automatic statutory entitlement to a transition payment. Nevertheless, in most cases an employer offers a severance payment that is at least equal to the statutory transition payment. In 2026, the maximum transition payment amounts to €102,000 gross. If your annual salary exceeds this amount, your gross annual salary applies as the maximum.

What many employees do not realise is that, in the case of a settlement agreement, this statutory maximum does not apply as an absolute ceiling on the payment. You can therefore negotiate a severance payment higher than the statutory transition payment. You can then use part of that additional amount to compensate for missed pension accrual — but you will need to raise this actively in discussions and have it set out in writing.

Via een settlement agreement you can make specific agreements with your employer regarding pension-related compensation. Consider, for example, an additional payment for missed pension contributions or the continued payment of pension contributions during a transitional period after the dismissal 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 lapses in principle on the day your employment ends. This can have far-reaching consequences for your partner or family.

Furthermore: many pension regulations provide for premium-free accrual of old-age pension during incapacity for work, but that 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 missing out on these additional entitlements.

The Future Pensions Act and the settlement agreement

Since the entry into force of the Wet toekomst pensioenen (Wtp) 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 may be faced with an unpleasant surprise after the fact.

It is advisable to carefully establish before signing whether you are eligible for compensation under the Wtp and, if necessary, to have this explicitly recorded in the settlement agreement. Lack of clarity on this point can later even give rise to disputes about the validity of the agreement.

Practical tips for your pension in 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 to compensate for missed pension accrual, particularly if you still have a number of years to go before you reach retirement age.
• Check whether your survivor's pension is insured on a risk basis and what the cover is after the end date — and consider negotiating a run-off period.
• Establish whether you are entitled to compensation under the Wet toekomst pensioenen 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 dismissal document; it is an agreement in which you can ensure that all 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 continued payment of premiums. Vague wording can lead to problems later — both for you and for your employer.

Bear in mind 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 Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven, we understand that a settlement agreement is about more than just a payment. Your pension, your future, and your financial security are at stake. We help employees in Eindhoven and the rest of Brabant to fully understand the contents 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 with you.

Frequently asked questions

Will my pension accrual stop immediately when 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 your employment does not end 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 agree in the settlement agreement that my employer will continue to pay the pension contributions?

Yes, that is in principle possible. In a settlement agreement, you can make specific arrangements regarding the continuation of pension contribution payments or an additional payment to compensate 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 transition payment affect my pension?

Not directly. The transition payment is a severance payment intended as compensation for the loss of employment. You may choose to use a portion of it to make up for missed pension accrual, but that is your own decision. What is important to note is that in a settlement agreement you can negotiate a higher payment than the statutory transition payment, with pension compensation potentially forming part of those 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 (Wet toekomst pensioenen — Wtp) came into force in July 2023, some employees are entitled to compensation in connection with the pension transition. Anyone who signs a settlement agreement and thereby leaves employment may lose this entitlement to compensation without realising it. It is advisable to discuss this point before signing and, where applicable, to include it in the settlement agreement.

We are happy to think along with you. For advice tailored to your situation, we would be glad to talk. No rights can be derived from the content of this page and it may contain inaccuracies.