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Transition payment for an employee who has reached state pension age (AOW)

As an employee who has reached the state pension age (AOW), are you entitled to a transition payment? Below you can read what applies in the event of dismissal and what you need to bear in mind.

Whether, as an employee around state pension age, you are entitled to a transition payment transition payment depends on the precise moment of dismissal: before or after reaching that age. That may sound straightforward, but in practice it is precisely this distinction that gives rise to many questions and misunderstandings. In this article you can read when the right to a transition payment does and does not exist, what an important ruling of the Supreme Court says on the matter, and what to look 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 rationale behind that 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 employed beyond your state pension age (AOW age) and are subsequently dismissed. In that case too, the right to a transition payment lapses, regardless of how long you have continued working after your 67th birthday. In 2026, the AOW age for most employees is 67.

Continuing to work beyond the AOW age and the consequences for dismissal

More and more people are continuing to work after their 67th birthday, sometimes because they enjoy it and sometimes because their employer wishes them to. The law gives employers broader options when it comes to employees who have reached AOW age: for instance, they may offer a maximum of six temporary contracts over a period of four years before a permanent contract comes into existence. The notice period is also generally shorter than for regular employees.

With regard to the transition payment, however, nothing changes for the better: anyone who re-enters employment or continues working after reaching AOW age and is subsequently dismissed has no entitlement to a transition payment either. This applies regardless of the length of the employment relationship after the AOW date.

Dismissal shortly before the AOW date: the Supreme Court is clear

The situation becomes more complex if your employer dismisses you before you have reached AOW age. The Supreme Court gave a landmark ruling on precisely this situation on 5 October 2018 (ECLI:NL:HR:2018:1845). The case that gave rise to this judgment concerned a teacher who was dismissed by his employer on grounds of long-term incapacity for work whilst he had not yet reached AOW age.

The employer — and initially the subdistrict court as well — took the view that it was unacceptable by standards of reasonableness and fairness to award the full transition payment, on the basis that the employee would in any case be retiring soon and his loss of income was limited. The Court of Appeal in Den Bosch took a different view and did award the full payment. The Supreme Court upheld that judgment.

The essence of the ruling: the transition payment is a statutory fixed-rate payment. The legislature deliberately chose not to include a cap based on loss of income, as was common practice under the old subdistrict court formula. The fact that an employee is close to reaching AOW age or suffers only a limited loss of income is therefore insufficient reason to reduce the payment.

What this means for you in practice

Have you not yet reached AOW age at the time of your dismissal? In principle, you are simply entitled to the full transition payment, even if your AOW date is only a few months away. Conversely, if your AOW age has already commenced, that right lapses — however long you have continued to work.

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 AOW age officially commences; it is that specific day itself, not the first of the month.
• Does your employment contract or collective agreement contain a retirement clause? If so, the employment relationship ends by operation of law on your AOW date, without your employer needing to give separate notice of termination.
• Is there no retirement clause? In that case, your employer must formally terminate the contract if they wish to bring it to an end, even once you have reached AOW age.
• If you are dismissed before you have reached the state pension (AOW) age — even if the difference is small — you are in principle entitled to the full transition payment.
• Are you receiving an IVA benefit and are you almost entitled to your state pension (AOW)? Even then you can claim the full transition payment if your employer terminates your employment before your AOW date.
• Always have a settlement agreement checked before you sign it, even if you are close to retirement.

What to do if your employer refuses or reduces the payment

Some employers try to refuse the transition payment or reduce it on the grounds that you will be retiring soon anyway. The Supreme Court ruling of 2018 makes it clear that this argument has no legal basis as long as you have not yet reached the AOW age at the moment 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 mapped out, so that you can make a well-considered decision.

Why Employment Lawyer 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 your hands or are unsure about the amount of your payment: we are happy to think things through with you. Contact us without obligation for an initial consultation — we will calmly explain where you stand.

Frequently asked questions

Am I entitled to a transition payment if I am dismissed just before I reach the AOW age?

Yes. If you are dismissed before you have reached the AOW 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 almost entitled to your state pension is not a reason to reduce or refuse the payment.

Am I entitled to a transition payment if I continue working after my AOW age and am subsequently dismissed?

No. Employees who have reached the AOW age and are subsequently dismissed have no entitlement to a transition payment. This also applies if you entered into new employment after your AOW date, regardless of how long you worked after that.

Is my employer allowed to 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 statutory flat-rate payment on which the approaching retirement has no bearing. As long as you have not yet reached the AOW 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 amounts to €102,000 gross. If your annual salary exceeds €102,000, that annual salary applies as the maximum. The payment is calculated on the basis of one third of a monthly salary per completed year of service.

What is the AOW age in 2026?

In 2026 the AOW age is 67 years. This also applies in 2027. From 2028 onwards the AOW age will rise to 67 years and 3 months. Your exact AOW date depends on your date of birth and can be looked up via the Sociale Verzekeringsbank (SVB).

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.