Dutch pensions explained: A guide for expats

When relocating to the Netherlands with the intention of staying, it’s essential to understand the Dutch pension system. The Netherlands has a well-structured and regulated pension framework designed to provide financial security for retirees. However, it differs from pension systems in other countries. In this article, IQ Staffing explains the key pillars of the Dutch pension system and what expats should know.

How the Dutch pension system works

The Dutch pension system is based on three main pillars that provide financial support in retirement:

State Pension (AOW – Algemene Ouderdomswet): This is a basic pension provided by the government to all residents who have lived or worked in the Netherlands. The amount depends on the number of years you have been insured under the AOW scheme, with full benefits granted after 50 years of residency.
Workplace Pension (Werkgeverspensioen): Many employers provide a supplementary pension scheme, which employees contribute to during their working years. These pensions are typically administered by sector-wide pension funds or private pension providers.
Private Pension (Individueel Pensioen): Individuals can choose to set up additional pension savings through private investment plans, life insurance, or annuities to supplement their state and workplace pensions.

State Pension (AOW)

The Dutch government pays a state pension to people who have reached retirement age. The pension age is being gradually increased, so your pension age will depend on your date of birth. The amount you receive depends on how long you have lived in the Netherlands and whether you live alone or with a partner. This means that expats who have not lived in the Netherlands for a full 50 years may get a reduced AOW pension.

You can find out more about the AOW pension on the website of the Sociale Verzekeringsbank.

Workplace pension schemes

In addition to the state pension, many employers automatically enrol their employees into a pension scheme and deduct contributions from their salaries. Some industries have collective pension funds, while others use private pension providers. Contributions are usually shared between employer and employee, and benefits are paid out on retirement. When accepting a job offer, it is therefore important to look at the pension scheme offered.

Private pension options

Expats looking to supplement their pensions have several options for individual pension savings. These include bank savings, investment accounts, and annuity-based pension plans. Additionally, some international pension plans may be transferable to Dutch schemes or vice versa, depending on tax regulations and bilateral agreements. It is advisable to seek financial advice to determine the most suitable option based on personal circumstances and long-term retirement goals.

What you need to know as an expat

Checking your pension rights: You can review your pension contributions and projected benefits through the Dutch Pension Register, which provides an overview of state, workplace, and private pensions.
Transferring pensions: In some cases, you can transfer your pension to or from the Netherlands, depending on agreements between countries and specific pension scheme regulations. It’s important to check the conditions and potential financial implications before making a transfer.
Tax considerations: Pension payouts may be subject to taxation in either the Netherlands or in your home country, depending on tax treaties. Consulting a tax advisor can help ensure compliance and optimize tax benefits.

Early action beats late reaction

Understanding the Dutch pension system is crucial for expats planning their financial future in the Netherlands. The sooner you explore your pension options, the better prepared you’ll be for retirement—waiting too long could limit your choices. If you’re uncertain about your pension rights, consulting a financial advisor or using online pension tools can provide valuable guidance to help you navigate the system effectively.