What is the annual pension contribution allowance?
Annual allowance is the amount you may use in a tax-deductible manner for pension accrual within a given year. This allowance only arises if you accrued insufficient pension in the previous year. The calculation looks at your income and any pension rights. If you have a pension shortfall, annual allowance is created. If you have no shortfall, the annual allowance is zero. You always use annual allowance in the current calendar year. Any unused annual allowance can be carried forward as unused allowance space over the next ten years. For unused allowance space in 2026, this concerns unused annual allowances from 2016 up to and including 2025.
What is an annuity premium?
An annuity premium is the amount you deposit for a supplementary pension. You do this via an annuity savings account, annuity investment account or annuity insurance policy. With this deposit, you build up capital for later. You usually receive the payout from your retirement age. You pay this contribution yourself; even an employee can have tax-deductible space for this. Only premiums that you actually pay are eligible for tax relief.
Annuity premium deduction
You can deduct annuity premiums if you have unused pension space or reserve space. This deduction directly reduces your taxable income. You only deduct premiums that you paid in that same calendar year. If you deposit more than permitted, the excess is not deductible. That amount does remain in your annuity. Separate rules apply to non-deducted contributions upon subsequent payout. Keep your deposits and tax returns and check whether and up to what amount those contributions are taken into account. The Dutch Tax and Customs Administration explains this balance method. Annuity deduction is a private deduction in box 1, not a regular business expense item.
When do you have no annual allowance?
Your annual pension contribution allowance may be zero because of your income and pension accrual in the previous year. For the 2026 allowance, an additional condition applies: if you were born before 1 September 1953, you cannot use it. You may still have a carry-forward allowance, so a deduction can sometimes be available even without a new annual allowance. Check the conditions for annuity premium deduction.
Calculating your annual pension contribution allowance
For your 2026 annual pension contribution allowance (jaarruimte), use the relevant income and pension figures for 2025. The calculation starts with 30% of the contribution base: relevant income, capped at the statutory maximum, minus the statutory offset (franchise). Pension accrual can reduce this allowance. The information required also depends on your pension scheme. For your personal calculation, use the Tax and Customs Administration’s annuity contribution calculator.
What do you need?
Have your income details for the previous year, your pension statement and previously paid annuity contributions to hand. Follow the income definitions and questions in the official calculation tool; just the final amount of your taxable income is not always sufficient. Fill in factor A or other requested pension details for the correct year. For unused tax-deductible space, you will also need the details and used deductions from previous years.
Example: calculating your annual pension contribution allowance
Simplified fictitious example for 2026: the relevant income for 2025 is €50,000 and there is no pension accrual that reduces the allowance.
- Statutory offset (franchise) for 2026: €19,172.
- Pensionable salary base: €50,000 − €19,172 = €30,828.
- 30% of this amount: €9,248.40.
In this simplified example, this is the calculated headroom, not a tax refund. Check your actual deduction with the official calculation tool and the contributions paid. Source for the annual amounts: Main tax changes 2026, table 38.
Carry-forward allowance (reserveringsruimte)
The carry-forward allowance consists of unused annual pension contribution allowances from previous years. You can use these in later years, looking back up to ten years. A statutory annual maximum applies. Always use the oldest available allowance first, because unused allowances eventually expire.
Example: calculating the carry-forward allowance
Reserve space also works with simple addition.
- Three years ago, you had €1500 annual allowance.
- You did not deposit anything in that year.
- This amount moves into reserve space.
In a later year, you may still use this €1500 to deduct an annuity premium, as long as you stay within the legal limits.
What is a pension gap?
In plain language, a pension shortfall means that your expected retirement income does not match what you will need later on. That is not quite the same as the fiscal pension deficit in the annual allowance calculation. That calculation follows statutory income and pension rules. A personal desire for a higher pension therefore does not automatically result in more tax-deductible space. Also check whether a compulsory pension scheme applies to your profession or whether you are building up a pension in employment alongside your business.
State pension as a basic pension
The State Pension forms a basic provision. Whether you are insured and how much State Pension you build up depends on your situation; living or working abroad can make a difference in this regard. Compare your expected State Pension and any other pension income with your expected outgoings. This allows you to determine whether and how much top-up you need.
Future Pensions Act (WTP)
The Future Pensions Act increased the tax allowance for pension contributions. Since 2023, the annual allowance has been based on 30% of the contribution base. Unused annual allowances can also be carried forward for up to ten years. In addition, contributions may continue for longer after reaching the state pension age. These changes make pension saving more flexible for entrepreneurs.
Summary
Calculate your allowance using the correct annual data before locking up money in an annuity. Take into account existing pension accrual, unused allowance from previous years, the product terms and conditions, and your available buffer. Keep the calculation, annual statements, and proof of deposits for your tax return. Deduction now does not mean that later payouts are tax-free.
