Dutch pension provisions are amongst the highest in Europe. At the end of 2006,
there was a total of 941 billion euro in pension; nearly 1.8 times the value
of the gross domestic product (GDP). It's not however a completely rosy picture.
With the growing ageing population, these old age provisions are coming under
pressure. The system needs to be modernized and more cost controls are needed
if the system needs to remain affordable in the future.
The Dutch pension system is based on three basic pillars:
- State old age pension scheme: This scheme provides all residents of the Netherlands at the
age of 65 with a flat-rate pension benefit that in principle guarantees 70%
of the net minimum wage. There is no means-test for the eligibility
of benefits; other forms of income have no effect on the pension entitled.
- Occupational pensions: Although there
is no obligation for employers to make pension commitments to their employees,
the vast majority of those employed in the Netherlands (over 90%) participate
in an occupational pension scheme. If the collective
labour agreement lasts for 35 to 40 years, the total pension benefit will
be around 70% of the final salary, including first pillar benefits.
- Private pensions:The third pillar
of the Dutch pension system comprises individual pension provisions. These
should be taken out by an insurance provider and have nothing to do with the
relationship between employer and employee. Everyone has the opportunity to
enter into these arrangements with an insurance provider. This can be done
through annuity insurance as well as endowment insurance.
The mandatory age of retirement in the Netherlands
is 65 years of age.