Pension scheme for Expats in Netherlands
Now that we have completely settled in the Netherlands, we can make plans for the future. The most important of these plans is Pension in the Netherlands.
The pension system has been a topic I wanted to write about for a long time. It is an important title for those who come here to work as immigrants like us.
First of all, let me tell you about the Dutch pension system in general, then how does the pension system for immigrants work? Let me tell you briefly.
Dutch pension scheme is built on three main pillars namely, state pension, private employee pension system (regulated by pension law) and individual private pension.
This is the base pension for person who lives and works in the Netherlands entitled to, if you worked / lived more than a year.
It is also known as AOW pension. This pension is tied to minimum wage, under certain conditions as follows
- - Living on your own minimum wage
- - Living with your partner minimum wage (once your partner also reaches retirement age, then together it will be 0)
- Everyone living in the Netherlands, with some exceptions, is insured, and with every year people are insured, they build up rights to 2% of the full AOW pension
- If you have lived or worked outside the Netherlands, you are likely to receive a lower pension after retirement because you did not contribute to the insurance for a period of time and therefore accumulated less.
- Also, if you born after April 1st 1950, you will not receive AOW pension if your insurance period is less than a year.
As the average lifetime expectancy increased, AOW pensions changed retirement age as well. Here below is the table till 2022;
- - To 66 in 2018
- - To 67 in 2021
- - To 67 years and 3 months in 2022
After 2022, it will be linked to lifetime expectancy. There is a calculator in SVB, where individuals can calculate what would be their retirement age for state pension.
Early Retirement is an option, but it usually has to be self-financed until the official Dutch pension age, before which AOW payments will not be made or otherwise reduced. Similarly, you can also choose to delay your retirement, beyond the retirement age can increase your pension benefits and allowances
Private Employee Pension
The company pays its employees a monthly pension fund. The return on investment from capital investment pays for pension benefits for current and future retirees.
Most of the pension funds are related with specific businesses, but still, laws requires pensions to be independent and non-profit institutions, therefore they are protected.
There is also a wide range of private pension funds regulated by the pension law which are intended as pension provisions for employed persons.
Private employee pension funds in the Netherlands are non-profit organizations and operate as foundations and are considered independent legal entities not forming a part of any company under Dutch law. Therefore, if a company gets into financial difficulties, its pension fund will not be affected. Hollandalı çalışanların% 90’ından fazlası özel emeklilik fonuna sahiptir.
Individual Private Pensions
These are mainly used by the self-employed and employees in sectors without a collective pension scheme.
Simply, it is pension wealth management products. In this way, individuals can buy and manage pension products or investments independently, such as life insurance, stocks or real estate and related tax benefits
Anyone can purchase a product in the third pillar to meet his/her requirements. In this way, people can save extra pension, often taking advantage of tax benefits. If a person chooses to save money or themselves this is also considered to be part of the third pillar.
When someone has a debt-free home or stocks that they sell at the moment of pension, this value can be seen as additional wealth that can be used for a better and more comfortable living standard
How much pension will I get?
That is of course purely based on your contribution over the years, but there is a website, where you can actually see how much pension is accumulated till now, how much you might get at pension age, how much you might get if you retire earlier than pension age or if you delay it. Be aware these are all hypothetical calculations which might divert for good or bad over the coming years. That is also explicitly mentioned in this website as disclaimer note. https://www.mijnpensioenoverzicht.nlthis webstite. Remember that there are hypothetical calculations that may improve or worsen in the coming years. This issue is also clearly stated on the website as a disclaimer
This website also provides additional information with hypothetical scenarios, such as if you die now or after retirement, what happens to survivors’ pensions. You need to login via DigID. You must be logged in with DigID.
If you are still looking for a number, let me give a ball park value if you have 60k euro pensionable salary, you will get something 2.5k +/- 500 euro (netto) inc. AOW pension, based on your fund, your contribution and your continuation.
What are the differences for Expats ?
Again, first things first, Expat or not, if you work more than a year than you are eligible to receive pension by the age of retirement. Another important point for expats is, you need to keep the administration of your pension, because if you move out of the Netherlands, it might be transferred to the country you moved on. However, in order to make it happen, you need actively trace it.
I hope you have learned a little bit about the pension system in the Netherlands.