Special products

Annuity – golden handshake

At FIC, we are always on the lookout for market opportunities to maximise our clients’ returns, and taxation may play a key role in that process.

In the Netherlands, banks and insurance companies offer a variety of savings forms, such as annuity (i.e. saving for retirement), capital insurance own home (saving to repay the mortgage at a future date) and the ‘golden handshake’ policy (i.e. transferring severance pay before tax to your insurance company).

An advantage of these types of savings is that they are often subject to tax benefits. In the case of annuity, for example, the amount you pay is tax-deductible. The annuity payments will, however, be subject to taxation in due course. Both during the accrual period and the payment period, annuity is exempt from the 1.2% tax on imputed return on investment (Box 3 on your income tax form).

In the case of a ‘golden handshake’ policy, severance pay (before tax) is transferred to an insurance company or to a private company incorporated to hold the severance pay for a standing right, giving entitlement to periodic payments (‘stamrecht BV’). In this type of savings, too, the amounts to be received will be subject to taxation in due course, and the golden handshake is exempt from the 1.2% tax on imputed return on investment (Box 3 on your income tax form).

However, there are also a number of disadvantages involved. Up until 2008, the tax benefits only applied to products purchased from an insurance company. In many cases, the tax benefit was so advantageous that any cons were agreed to as part of the bargain. These disadvantages were related in particular to the high costs and limited investment opportunities. One of the consequences is that many insurance companies offer investment opportunities only in their own in-house funds.

FIC has created a number of products that offset these disadvantages:

• low costs
• ample and flexible investment opportunities
• access to alternative investment vehicles, which, particularly during tough times, ensure a positive return on investment

For all of these products, the value of, for example, annuity of your FIC investment account (with the deposit bank Binck Bank) is maintained. Together with FIC, you can determine how to invest the value of your annuity. In addition, we offer complete transparency with respect to the low costs. Your benefits are higher return through access to a larger number of investment opportunities and lower costs.

Mortgage

In choosing the best possible mortgage, key factors are not only loan conditions, such as the interest rate and the removal scheme; you must also critically assess the savings type in terms of repaying the mortgage (or a portion of the mortgage) in due course. Note that this approach will only be required by a bank if you wish to obtain a mortgage that is higher than the forced-sale value of the property.

A savings could take the form of a one-off deposit into an investment fund, or a savings insurance. What these types of savings have in common is that they will be pledged to the bank.
Many banks do not offer a wide range of investment opportunities, and in many cases the only option you have is investing in one of their in-house funds. Through FIC/Finsens, an account can be pledged from a deposit bank to the bank where the mortgage is held. This option allows you to optimise your mortgage in addition to the savings form.