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Pension system structure

The Dutch pension system consists of 3 pillars:

• AOW
• Supplementary pension accrual via the employer
• Supplementary individual pension insurance.

General Old Age Pensions Act (AOW)

The AOW is the 1st pillar of the pension system. It is the basic income to make ends meet. Everyone who lives or works in the Netherlands automatically accrues AOW. The amount of the AOW has adjusted annually to the development of the minimum wage.

Pension accrual through the employer

The second pillar is pension accrual through the employer. About 90% of employers have a supplementary pension scheme. As a result, retired employees receive an additional benefit on top of the AOW benefit.

Usually, employers pay about 2/3 of the total pension contributions and employees 1/3. Pension funds invest the contributions in order to be able to pay out supplementary pension later.

Individual supplementary pension provisions Individual insurance forms the 3rd pillar.

For example, annuities, single premiums and life insurance. This saves you fiscally attractive for an extra pension. For example, to supplement a pension gap or to retire earlier. Self-employed persons can also opt for an individual pension provision.

Pension provision for self-employed persons

There are various pension schemes that are specially tailored to self-employed persons. These are voluntary schemes in the 3rd pillar. It is the self-employed person’s own choice to participate and for what amount.

Supervision and regulation in the pension law

The rules for pensions are contained in the Pensions Act. This law regulates the duties and responsibilities of pension funds, employers and employees. De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) carry out the supervision.