The Dutch pension system is made up of three pillars which together determine the amount of pension a person will receive when they retire. These pillars are:
Pillar 1: The state or AOW pension
The state or AOW pension (basispensioen) is paid from the age of 65 and provides basic benefit payments of up to 70 percent of the minimum net wage. Under the General Old Age Act or Algemene Ouderdomswet (AOW), which came into effect in 1957, all people who have lived or worked in the Netherlands between the ages of 15 and 65 are entitled to receive the state pension.
The amount of state pension you receive depends on the pension rights you have built up during your working life in the Netherlands. Each year that a person pays (health) insurance in the Netherlands they accrue two percent of the state pension benefit. People who do not work will also accrue the state pension rights.
The state or AOW pension is provided by the Sociale Verzekeringsbank (SVB) which manages and implements the Dutch national insurance scheme.
Pillar 2: Collective pension funds
The second source of Dutch pension benefits are collective pension schemes connected to a specific industry or company. Such collective or private schemes are managed by pension funds (pensioenfonds) or insurance companies.
Pillar 3: Individual pension products
The third part of the Dutch pension system is individual pension products or supplements. Such supplements are mostly used by self-employed and employees in industries with no collective pension funds. In this way individuals can independently buy and manage pension products or investments such as life insurance, shares or property, and take advantage of related tax breaks.
Retirement age in the Netherlands
As in many countries, the age of retirement, when you are eligible to start receiving your pension, is being gradually pushed back by the Dutch government:
- In 2015 the age of retirement was 65 years.
- In 2017 the age of retirement was 65 years and nine months.
- In 2018 the age of retirement is 66 years.
- In 2021 it will be raised to 67 years.
- From 2022 the age of retirement will be linked to life expectancy.