The pension system in the Netherlands

The Netherlands is probably one of the best places on the planet for retired people, with a sustainable and robust pension framework that provides great revenue to the country's older populace.

Around 30% of Dutch occupants are beyond the age of 65, as compared to an average of 28% across the 37 OECD nations.

The Netherlands is positioned to be the 5th best place to retire on the Natixis 2020 Global Retirement Index, in view of finance, health, quality of life, and material prosperity, ascending from 10th place in 2019. The Dutch pension system topped the table in Mercer's 2020 Global Pensions Index, with high ratings for sustainability, adequacy, and integrity.

The Dutch pension system has 3 pillars: state, workplace and private pensions. The Sociale Verzekeringsbank (SVB) administers state pensions under the terms of the General Old Age Pensions Act (Algemene Ouderdomswet, or AOW). The state pension is commonly known as the AOW.

$1.7 trillion worth of assets were held by the Dutch pension funds in 2019, right behind the United States, United Kingdom, and Australia. Total pension fund assets were 191% of GDP, more than any other OECD nation.

Who is qualified for pensions in the Netherlands?

Pension age in the Netherlands

The Dutch state pension age in 2022 is 66 years and 7 months, having risen from 65 in the year 2018. It might rise to 67 in the year 2024.

The date you receive your Dutch pension depends on your date of birth. The SVB offers a Dutch pension age calculator for you to be able to find out your individual retirement age.

It's possible for anyone to retire early in the Netherlands. However, if you choose to retire early, you will have to finance this yourself, as your full state pension won't be issued until you reach your official Dutch retirement age.

You may also choose to work past your standard retirement age to build a bigger pension if you desire.

Who can claim a state pension in the Netherlands?

For every year you live and work in the Netherlands, you build 2% towards your state pension. To get the full pension(100%), you should have 50 years of contributions. In the event that you don't have the full contribution, your pension is determined on the basis of the number of years of your contribution.

Assuming you move outside the Netherlands, this can decrease your pension amount. Thus, you can lose 2% of your Dutch pension for every year you haven't lived in the Netherlands.

Under certain circumstances, foreign workers can still benefit from the Dutch pension framework. For instance, some ex-pats choose to take out their pension within a span of a year of moving to the Netherlands.

What happens if you don’t qualify for a full pension?

If you do not qualify for a full AOW state pension, you still have an option to apply for an AIO supplement.

The AIO can bring your pay scale up at least to the level of the Dutch guaranteed minimum payment. To qualify, you should be of pension age, live in the Netherlands, not be able to get a full state pension, and have little or no other pay resource.

The maximum AIO supplement in 2020 is €1213.06 per month for occupants who live all alone. Assuming you live with your partner and you both need an AIO supplement, you can altogether receive €1642.54 every month. On the off chance that your partner doesn't need a supplement, you could be qualified for up to €821.27 every month.

Getting pension advice

It’s sensible to seek professional financial advice on your Dutch pension, especially if you’re looking forward to moving to the Netherlands.

If you are looking for an advisor, check out our website or connect with us at experts@adtsolution.com