25 January 2023

What is the Early Retirement Scheme (RVU)?

By Tatjana Maul

The retirement age is getting higher and higher, forcing people to work longer and longer.

In some cases however, this expectation is not reasonable. For example the case of employees who perform heavy physical work. Or those employees who simply cannot keep up with the work due to increasing digitalisation. By applying the Early Retirement Scheme exemption (RVU-vrijstelling), it is possible to reach an arrangement whereby these employees can retire early. In this article, I would like to explain what the Early Retirement Scheme entails.

What is the Early Retirement Scheme (RVU)?

RVU stands for Early Retirement Scheme. An arrangement qualifies as an Early Retirement Scheme if the employer financially compensates the employee after the end of employment to bridge the period until the employee is entitled to state pension. In that case, the tax authorities impose a 52% tax levy on the employer over this benefit/ severance pay. The intention is not that employees are made to stop working earlier than retirement age, especially given the severe shortages in the labour market at present.

To relieve the category of workers who are unable to continue working until retirement, an exemption to the early retirement scheme has been introduced. If the exemption applies, the 52% tax levy is omitted. To be eligible for the exemption, one must meet the following three conditions:

Condition 1: The scheme takes effect up to three years prior to the statutory state pension age.

If the scheme takes effect earlier than 36 months before the legal state pension age, then as an employer, you owe 52% tax on those earlier months.

Condition 2: The amount paid to the employee will not exceed the Early Retirement Scheme exemption threshold.

The total amount paid to the employee to bridge the period until retirement will not exceed the Early Retirement Scheme exemption threshold. For 2022, this is a maximum amount of €1,874 gross per month. The threshold exemption thus applies to a total amount of €1,874 gross multiplied by the number of months the employee has left until their state pension age, with a maximum of €67,464 gross (36 months).

Condition 3: The Early Retirement Scheme exemption only applies to payments to employees who are no more than 36 months away from their statutory state pension age in the period from 1 January 2021 to 31 December 2025.

If an arrangement is agreed no later than 31 December 2025 with an employee who reaches state pension age no later than 31 December 2028, the Early Retirement Scheme exemption for that arrangement will still apply. Outside this period, the exemption no longer applies and the tax rate of 52% is levied again.


The employer and employee have several options to shape the severance scheme that uses the Early Retirement Scheme exemption. As highlighted earlier, the parties can choose to have the benefit paid out at one-time or periodically. In the latter case, the periodic payment can be fixed or variable. The parties need to think carefully about this, as there are consequences to each choice.

Thus, in principle, the employee is entitled to unemployment benefit if the employment contract ends on the basis of a settlement agreement, and the amount received by the employee is a one-off payment. The settlement agreement must then also state that the initiative for termination of the employment contract lies with the employer and also that there is no misconduct by the employee. Of course, a one-off payment may result in the employee falling into a higher tax bracket that year.

If you pay the amount periodically, this will be offset against any unemployment benefit and the employee will either have a lower entitlement or no entitlement to unemployment benefit. In some sectors, the collective labour agreement states that a periodic payment is the starting point. Employers who fall under the scope of the relevant collective labour agreements are then bound by that basic principle.

MDIEU scheme

The government has made a subsidy scheme available. Employers can use this for the severance pay, to which the Early Retirement Scheme exemption applies. The Customised Arrangement for Sustainable Employability and Early Retirement (Maatwerkregeling duurzame inzetbaarheid en eerder uittreden, MDIEU) To benefit from the MDIEU scheme, employers and employees must meet additional conditions. To claim the subsidy, the end of the employment contract must be at the request of the employee. The employer must also pay the Early Retirement Scheme amount monthly. In addition, eligibility for subsidies requires that the employer invest in sustainable employability.

The application for this subsidy is made by the sectoral partners. Employers can join the sectoral partners by concluding a cooperation agreement.

Early Retirement Scheme in the collective labour agreement

Although any employer can make use of the Early Retirement Scheme exemption, a collective labour agreement may have restrictive or additional agreements on this. This applies, for example, to the collective labour agreement for the Metals and Electrical Engineering Sector (Metalektro).

In conclusion

The conditions for applying the Early Retirement Scheme exemption are clear. However its interpretation and potential additional rules can make it more complicated. If you have any questions or would you like more information, please do not hesitate to contact us. Our pension and employment lawyers will be happy to support and advise you.


Tatjana Maul

Related blogs

7 May 2024

Attention: another new development in employment law legal protection

Many labour law rules come from Europe. Therefore, for their application and enforceability, employers and employees should also look to 'Europe'.

Read more

26 March 2024

Loss of pension

It is common for an employer and employee to terminate an employment contract by entering into a settlement agreement.

Read more

7 February 2024

Pension accrual of ‘bogus self-employed persons’ and ‘platform workers’

Last year, the Swedish EU presidency published a draft proposal for a European directive to protect platform workers and combat bogus self-employment.

Read more