If a pension benefit is less than € 462,88 per year, the insurer or pension fund has the legal right to buy off that pension. Redemption means that instead of annual benefits, the pensioner receives a lump sum (and nothing after that, of course). That lump sum is, of course, equal to the present value of the expected future benefits. The right to surrender is unilateral: the insurer or the pension fund decides whether to surrender. The entitled party cannot object to this. The surrender usually takes place in the month following the date on which the person entitled to the pension benefits reached the state pension age.
An AOW beneficiary who has a younger partner may be entitled to a partner allowance in addition to his or her own AOW. However, the AOW partner allowance is cut if the AOW beneficiary has too much own income. The small pension commutation sum described above is such own income. However, the Central Appeals Council ruled at the end of 2014 that fully imputing a commutation sum for a small pension leads to an unreasonable result (i.e.: an excessive reduction of the partner allowance).
State Secretary for Social Affairs and Employment Klijnsma announced in a letter to the House of Representatives on 13 February 2015 that she would regulate that a commutation sum for a small pension would be fully released when determining the AOW partner allowance. The same applies to the Anw benefit and to benefits under the IOAW, IOAZ, TW and OBR. The necessary amendment to the Income Decree to this end is likely to follow shortly.