Pension system in the Netherlands
The Dutch pension system is based on three pillars: AOW (state pension), providing a basic income for retirees, the longer you lived in the Netherlands, the more you get. Occupational pensions, where employers and employees contribute to a collective pension fund; and your private savings, for additional retirement income.
We explore in this section
How does it work?
The Dutch pension system is based on three pillars: AOW (state pension), providing a basic income for retirees, the longer you lived in the Netherlands, the more you get. Occupational pensions, where employers and employees contribute to a collective pension fund; and your private savings, for additional retirement income.
The system is highly collective, with most employees covered by occupational schemes. Reforms are underway to make pensions more sustainable, shifting towards more individualized and investment-based models. Expats are generally included, but may need private savings for full coverage.
What is AOW?
AOW (Algemene Ouderdomswet), is the Dutch state pension that provides a basic income for retirees, funded by a pay-as-you-go system. This means that people currently working and paying social security contributions are funding the pensions of those who are retired.
- Eligibility: All residents of the Netherlands are entitled to AOW, provided they have lived or worked in the country between the ages of 15 and 67 (the retirement age, which may vary based on life expectancy).
- Amount: The amount of AOW you receive depends on how long you have lived or worked in the Netherlands. If you've been in the country for the full 50 years before retirement age, you receive a full pension, which is around 70% of the minimum wage for singles and 50% per person for couples.
- Retirement age: The official retirement age for the state pension is increasing because it is linked to life expectancy of Dutch citizens. In 2024, the AOW age is 67 years and 3 months. This will go up a little every year.
What is Occupational pension
Occupational pensions are provided by employers, and this is where the bulk of most people's pensions come from. In the Netherlands, there is a strong culture of collective pension schemes organized by companies, industries, or professional groups. Most employees participate in these schemes.
- Coverage: Over 90% of employees in the Netherlands have a pension scheme through their employer.
- Contribution: Both employers and employees contribute to this pension fund, with the employer typically contributing more. The money is invested to grow over time. Your employer pays a %. Some 100% but some 0%. Check this in your negotiation.
- Defined benefit (DB) vs Defined contribution (DC): Dutch pension schemes are mostly Defined Benefit schemes, meaning that employees are promised a certain amount based on their salary and years of service. However, there is a shift towards Defined Contribution plans, where the payout depends on the investment returns.
Private savings
In the Netherlands, you can do private savings with Tax Benefits. You can also get a pensioenrekening by a broker like DeGiro to buy stocks with a nice tax cut. They are voluntary. People who wish to supplement their first and second pillar pensions, or those who are self-employed and do not have access to a workplace pension, can save or invest through private pension plans or other financial products such as life insurance. Contributions may come with tax advantages, encouraging people to save more for retirement. You have several companies listed below that can help you with private savings.
How does the pension system work for expats
Expats in the Netherlands participate in the state pension system based on residency and can benefit from occupational pensions if they are employed. Private pensions offer flexibility for those without access to company schemes or who want to save more. Check the providers below.
The Netherlands has agreements with many countries to prevent double taxation and to allow the transfer of pension rights.
Expats may have gaps in their pension coverage if they move between countries frequently, so private savings or arrangements in other countries may be necessary. Private saving could be wise, check providers below.
Recommended companies
BrightPensioen
BrightPensioen is a Dutch pension provider that offers a unique, member-based approach to saving for retirement. It focuses on the self-employed, freelancers, and people without access to a traditional employer pension scheme, which is common in the Netherlands.