The Dutch pension system is made up of three tiers.
- The first tier consists of government pension provision (AOW, ‘old age’ pension).
- The second tier consists of company pension provision, accrued via one or more employers. The aim of company pension schemes is to supplement the AOW amount to a level where the final pension equals 70% of the salary.
- The third tier is optional and consists of personal future provisions schemes.
Every resident and every employee in the Netherlands accumulates approximately 2% AOW entitlement each year they have lived or worked in the Netherlands. When you leave the Netherlands, these accumulated AOW rights are retained. However, AOW payments are only made to countries with which the Netherlands has a treaty.
The pension provisions that you pay into a Dutch pension fund are marked on your salary slip with abbreviations such as ABP, OP/NP, etc. These deductions (about 7,5% of your gross salary) will take place before taxation. Besides your own contribution the employer also contributes into the Dutch pension fund. The employer’s contribution is about 17% of your gross salary.