European Trade Union Institute, ETUI.

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The state of pension reforms in the Netherlands - background summary

Features of the Dutch pensions system

  • The pensions system comprises three pillars. The first is the general old-age pension scheme (AOW). This is a basic pension for persons aged 65 years or over.
  • The 2012 reforms to the first pillar aimed gradually to raise the pensionable age from 65 years as of 1 January 2013 to 66 in 2019 and 67 in 2023. However, in 2015, the Government speeded this arrangement up: the qualifying age for the basic pension will now rise to 66 in 2018 and 67 in 2021. The pensionable age laid down in law is 65 years and 1 month for those born in 1948, rising to 67 years for those born in 1957. From 2024 onwards, the qualifying age may rise more rapidly depending on life expectancy according to conditions to be laid down in 2019.
  • Each legal resident of the Netherlands is eligible to receive the AOW (provided they have resided in the Netherlands for a specific number of years – between the ages of 15 and 65 years for a full AOW pension, i.e. 50 years’ residence), financed from pay-based contributions or earned income. This provides a degree of protection against the impact that spells of unemployment have on pension levels, given that unemployment significantly reduces the occupational pension available under the second pillar.
  • The second pillar comprises the occupational pension schemes and supplements the AOW scheme. The social partners are responsible for managing the second pillar. Occupational schemes are managed in line with the principle of capitalisation and the pensions paid account for a very significant share of the income of the over-65s (more than 40%). A law to improve governance of these schemes was approved in 2013. Since 2013, the pensionable age under occupational schemes has also risen from 65 to 67 years. Occupational schemes are financed by employer contributions – and sometimes by employee contributions – and by returns on investment funds in the financial markets. The workings of the second pillar are a source of concern for the Dutch people because the fall in both interest rates and returns on financial markets are weakening pension funds.
  • The third pillar comprises private pension schemes: generally speaking, life assurance or retirement insurance contracts taken out with insurance companies.