How does retirement work in the Netherlands?
The Dutch pension system consists of 3 pillars:
- the state pension,
- the pension you accrue through your employer,
- and any additional, individual retirement insurance policies.
The 3 pillars of the pension system
- General Old Age Security Act (AOW).
The state pension is the first pillar. It is intended as a basic income. Everyone who lives or works in the Netherlands automatically accrues AOW.
The amount of your AOW depends on:
- Whether you live alone or live together;
- and how many years you have lived in the Netherlands.
You can find the current amounts on the Social Insurance Bank (SVB) website.
- Pension accrual through your employer
The second pillar is the pension you accrue through IBM. This gives you an extra pension on top of your state pension later.
IBM pays a portion of the premium, and you pay a portion yourself. IBM remits the premium to a SPIN. We invest the money. Do you have a DB pension? Then we pay your pension benefit to you on your retirement date. Do you have a DC capital? Then on your retirement date, you convert this capital into a pension benefit with an insurer or another administrator.
- Individual supplementary pension plans
The third pillar consists of individual insurance policies, such as annuities and life insurance policies that you can take out with an insurer.
In this video, we briefly summarize the above three points for you.
For example, do you want to fill a pension gap or retire early? Then choose to make extra deposits into your DC capital with SPIN or take out an annuity with an insurer. Do you only have a DB pension with SPIN? Then you cannot make additional contributions.
Future Pensions Act
The way pension is accrued through the employer is going to change. Learn more about this and what may change for you here.
Types of pension providers
There are different types of pension providers:
- Industry pension funds
A fund for an entire industry, such as health & welfare or the furniture industry. Often employers are required to join it for their employees. - Corporate pension funds such as SPIN
Large companies may have their own pension funds. - Occupational pension funds
These are for certain groups of self-employed people, such as general practitioners and medical specialists. Participation is usually mandatory. - General pension funds
A General Pension Fund (APF) is a pension fund that administers one or more pension plans. An APF manages one or more groups of schemes. A collectivity ring contains the pension schemes of various employers (groups) and industries. Employers can place their pension schemes in separate groups managed by one APF.
- Premium Pension Institutions (PPIs)
A PPI runs schemes where the premium is fixed but the final benefit is not. This is called a defined contribution plan. A PPI can also provide advice and mediation. - Pension Insurers
Employers can also place the pension for their employees with an insurance company.
Oversight of the pension system
The Netherlands Bank (DNB) and the Financial Markets Authority (AFM) supervise pension funds, insurers and PPIs.
- DNB ensures that SPIN handles participants’ money with care and has a controlled and sound business operation.
- AFM looks at whether pension providers are informing their members (employees, pensioners and ex-partners) properly and clearly.