Pension in the Netherlands
Pension for employees in the Netherlands: how does it work?
As a non-Dutch employer with employees in the Netherlands, you will be faced with a pension system that can differ fundamentally from the system in your home country. Not only is the structure different, your obligations as an employer, payroll processing and the impact on employees can also be entirely different.
On this page you will discover:
- how the Dutch pension system works
- what your obligations are as an employer with employees in the Netherlands
- how the pension contribution is financed
After reading, you will immediately understand the main differences compared to what you may be used to in your home country.
Employing staff in the Netherlands
Are you considering employing permanent or temporary staff in the Netherlands? Than make sure you are well informed on the obligations you should fulfil.
We have listed the most important topics, click to read more on:
Employing staff in the Netherlands >>questions or need help?
If you have any questions after reading this article, we will be happy to help you. Our customer support team is here for you!
Contactform >The state pension in the Netherlands: the General Old Age Pensions Act (Algemene Ouderdomswet/AOW)
Employees in the Netherlands will only receive a minimum benefit when they retire, because the state pension (the General Old Age Pensions Act, or AOW) is not related to the wages someone earns.
Key principles:
- accrual is built up for each year someone lives or works in the Netherlands
- full accrual = 50 years
- not dependent on the employer
For non-Dutch employers this is often confusing, because the system is not based on an employee’s previous salary or career record in the way many other countries’ systems are.
How is state pension in the Netherlands financed?
Dutch employees pay 100% of the statutory pension’s contributions themselves. Employers do not contribute – as opposed to most countries where employers pay a compulsory employer’s contribution towards the statutory pension of their employees. Moreover, employees will only receive a benefit of around 50% of the minimum wage, because the state pension in the Netherlands is not related to the wages that an employee used to earn before retiring.
In short: the state pension is a minimum provision, not related to wages, and you as an employer do not contribute to it.
Read more on the English website of the Sociale Verzekeringsbank: Explanation | AOW | SVB
Pension via the employer: why?
Because the state pension is only a minimum provision, about 90% of employees in the Netherlands have a supplementary pension plan via the employer or via a social sector pension fund (a “sectoral pension fund”).
Offering a pension plan is not always mandatory, unless your company falls under a mandatory pension scheme in your sector. However, if you decide not to offer a pension plan to your employees, you may fall behind competitors that do. This can make it harder to attract and retain the right talent.
In many sectors, a compulsory supplementary pension has been arranged via sectoral pension funds. Before you set up a plan yourself, it is important to investigate whether a mandatory Dutch collective labour agreement or sectoral pension fund applies in your situation. This helps you avoid potential fines or double insurance in the future.
Request a quote for a Collective Labour Agreement (CAO) / Sectoral pension fund research
How does such a pension plan via you as an employer work?
The employee builds up an individual pension within the employer’s collective pension plan. This means the content of the pension plan is the same for all employees. Each (new) employee automatically becomes a participant in the collective plan. Costs are shared between employer and employee according to an agreed distribution key. At present, the employer’s contributions on average amount to 12% to 15% of the total gross payroll.
Pension accrual in the Netherlands is fiscally supported for both parties: the employer’s costs qualify as business expenses and the employee does not pay tax or social security contributions on their own contribution because it is settled via the gross monthly salary.
One key difference compared with pension arrangements in many other countries is that in the Netherlands the employee receives a lifelong pension benefit and cannot opt for a one-off lump-sum payment.
Can you, as a non-Dutch employer, also set up a pension plan for your employees in the Netherlands?
This is certainly possible, but it is not self-evident if you are not established in the Netherlands. Many insurers exclude non-Dutch employers, as European regulations prescribe that in cross-border situations the law of the country of the policyholder applies. Dutch insurers generally do not wish to be bound by foreign law. Through our network, however, our insurance broker has found a number of insurers willing to make an exception, which means it remains possible for employers without a Dutch establishment to insure their employees in the Netherlands adequately, depending on the country in which the employer is established.
Do you already have a pension plan for your employees in the Netherlands?
Please note that a new pension system was introduced in the Netherlands in 2023 and that all existing pension plans must be adapted no later than 1 January 2028. Updating such a pension plan is complex and takes time, both for you as an employer and for the adviser you engage. Therefore, do not wait too long to get started. If the plan is not updated in time, this may create risks for you as an employer that you will want to avoid. The fiscal consequences for the employee can also be significant.
Would you like to know more about pensions in the Netherlands?
Our in-house insurance broker, specialised in employers’ and employees’ income risks, will be happy to think along with you about the options to properly arrange the pension of your employees in the Netherlands ‑ also if you do not (yet) have an establishment in the Netherlands.
Employing staff in the Netherlands
Are you considering employing permanent or temporary staff in the Netherlands? Than make sure you are well informed on the obligations you should fulfil.
We have listed the most important topics, click to read more on:
Employing staff in the Netherlands >>questions or need help?
If you have any questions after reading this article, we will be happy to help you. Our customer support team is here for you!
Contactform >Related topics
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