Will mandatory disability insurance be introduced for entrepreneurs?

It is likely that compulsory disability insurance (arbeidsongeschiktheidsverzekering - AOV) for entrepreneurs will be introduced in the Netherlands from 2027. Talk about this has been going on in society and politics for a long time. Stakeholders presented arguments for and against. After numerous and many years of consultations between politicians, employers' and workers' organizations have reached an agreement on pensions, and part of this agreement is the introduction of a mandatory AOV for entrepreneurs.

Now entrepreneurs do not pay AOV, in case of temporary disability they use the savings made. However, practice has shown that in the event of a protracted or severe illness, many entrepreneurs do not have enough money to live on. The introduction of AOV is intended to solve this problem.

The benefits of introducing AOV include the fact that all workers in the Netherlands, including those registered as employers, will be able to receive the necessary means of life in the event of illness or injury. In addition, the introduction of AOV will not allow insurance companies to refuse insurance to entrepreneurs, including those whose profession is associated with risk.

The disadvantages of AOV are obvious - the need to pay monthly insurance premiums. Critics of the AOV fear that these contributions will be prohibitive, and argue that entrepreneurs can take care of minimizing health risks on their own. 

The amount of insurance payments and the practice of applying AOV are not yet known, the development of legislation on this issue is ongoing. The following recommendations will be taken into account in the legislative process:

1. Mandatory AOV for all entrepreneurs.
2. Insurance premium based on income. It is proposed to establish a payment of 8% of income and exempt these funds from taxation.
3. Payment of insurance payments to the tax authorities on a monthly basis.
4. Disability benefits are 70% of the last income on which AOV was paid.
5. The maximum amount of the AOV payment must match the payment from the employee's minimum wage. In 2022, the minimum wage is 1650 euros gross, but by 2027 it will change.
6. For the first 52 weeks after the introduction of the AOV, entrepreneurs will not be eligible for disability benefits.
7. AOV payments by entrepreneurs must stop when they reach the Dutch retirement age.
8. Establishing the disability of entrepreneurs should be based on general criteria. This means that the authorized bodies will determine the possibility of performing any work, without looking back at the experience or education of the disabled person.
9. Mandatory AOV should not apply to entrepreneurs who already have a disability pension, nor to individuals who already pay AOV as employees.

The development of the legislative framework for the introduction of AOV for entrepreneurs continues, what recommendations and to what extent will be taken into account, time will tell. 

Find out how Dutch entrepreneurs' pensions are formed, from our article.