Planning for retirement is an important step toward long-term financial security. In the Netherlands, the pension system is built on a robust three-pillar structure that supports individuals through various income streams post-retirement. Whether you are a resident or an expat, understanding how the Dutch pension system works in 2025 can help you plan for a secure and comfortable retirement.
The Three Pillars of the Dutch Pension System
The Dutch pension system is renowned for its stability and inclusivity. It consists of three interconnected pillars, each designed to provide a different layer of retirement income:
1. State Pension (AOW – Algemene Ouderdomswet)
The first pillar is the state pension, known as AOW, and is funded and administered by the Dutch government.
- Eligibility: You accrue AOW rights for each year you live or work in the Netherlands between the ages of 17 and the AOW age. You earn 2% per year, with the full pension (100%) achieved after 50 years of residency.
- State Pension Age: In 2025, the official AOW age is 67 years.
- Benefit Amount: As of 2025, the gross monthly AOW payment for a single person is approximately €1,580. For a person with a partner (both receiving AOW), the monthly benefit is around €1,080 each.
- Indexing: AOW benefits are indexed to changes in the minimum wage, and adjusted annually.
2. Occupational Pensions
The second pillar consists of collective pension schemes arranged by employers, often in cooperation with industry-wide or company-specific pension funds.
- Participation: Around 90% of employees are enrolled in an occupational pension due to sectoral requirements or collective labor agreements.
- Contribution Split: Contributions are typically split between employer and employee, often in a two-thirds (employer) / one-third (employee) structure, though a 50/50 split is also common.
- Types of Schemes:
- Defined Benefit (DB): Guarantees a fixed monthly pension based on salary and years of service.
- Defined Contribution (DC): Pension depends on investment returns from contributed funds.
- Retirement Age: Occupational pensions generally align with the AOW age, but early or late retirement options are often available.
3. Private Pensions and Savings
The third pillar involves voluntary, private pension arrangements to supplement income from the first two pillars.
- Common Products: Annuities and pension savings accounts (lijfrente) for example.
- Tax Incentives: Contributions may be tax-deductible up to certain limits (known as “jaarruimte” and “reserveringsruimte”).
- Flexibility: These plans are ideal for self-employed individuals, high earners, or those looking to top up their retirement savings.
Key Considerations for Expats
If you are an expat living or working in the Netherlands, it is important to understand how the pension system applies to your situation:
- AOW Eligibility: You may receive a partial AOW based on how many years you have lived or worked in the Netherlands.
- Transferring Pensions: The Netherlands has bilateral agreements with several countries to enable pension transferability and avoid double contributions.
- Occupational Scheme Access: If employed by a Dutch entity, you are usually automatically enrolled in a sector-wide or company pension plan.
Preparing for Retirement in the Netherlands
To build a secure retirement plan in the Netherlands:
- Track your entitlements: Check your expected AOW and occupational pension via the official portal.
- Consider voluntary savings: Especially important if you are self-employed or expect gaps in your pension accrual.
- Stay updated: Pension rules and limits are subject to change – review annually or with major life events.
Conclusion
The Dutch pension system in 2025 continues to be one of Europe’s most comprehensive and stable. With its combination of public support, employer schemes, and private savings, it offers a reliable framework for retirement income. Whether you are a local or an international worker, understanding how each pillar works allows you to make informed decisions for your financial future.
If you are looking for more insights on pension systems across Europe, Internago also provides detailed blogs about Spain, Germany, France and more.
Questions? Reach out to us at info@internago.com or visit our website and payroll portal for more guidance on international HR and payroll solutions.
Disclaimer:
This article provides a general overview. It is intended for informational purposes only and does not constitute legal or financial advice. For guidance specific to your situation, please consult a qualified professional.