CMS Expert Guide to Pensions in Netherlands

The Netherlands has a three-pillar system for old-age pensions. The first pillar is the basic state old-age pension (AOW), which is largely funded by contributions from taxpayers below the pensionable age. The pensionable age for the AOW increased to 67 in 2024 and will gradually rise to 67 years and three months by 2028, with further increases linked to life expectancy. The gross annual payment for the state pension is approximately EUR 12,000 per person for married couples and EUR 18,000 for single households. 

The second pillar consists of private occupational pension plans, while the third pillar comprises personal pension arrangements. Various significant legislative amendments have recently been introduced, with further proposals either pending or announced. There is a transition period for implementation until 1 January 2028.

Occupational pension plans are established by third-party pension providers. With few exceptions, these are either pension funds (in the vast majority of cases) or insurance companies. Pension providers receive contributions from sponsoring employers and participating employees, invest these funds, and arrange for the payment of benefits.

Defined benefit plans will no longer be permitted after 1 January 2028 and have not been allowed to be established since 1 July 2023. Pension provision may only take the form of defined contribution plans. There are three types of defined contribution arrangements: the solidary defined contribution agreement, the flexible defined contribution agreement, and the contribution benefit agreement.

There is no general legal requirement to provide pension plans for employees. However, in practice, around 90% of the workforce is a member of a pension scheme. This is largely because most employers are either (a) legally obliged to participate in a mandatory plan for their particular industry, or (b) required to enrol their employees in such schemes under collective labour agreements.

Yes. An occupational pension scheme is either provided (a) by law, requiring participation in a mandatory pension fund for an industry, or (b) based on an individual or collective agreement between employers and employees (or their representatives). Personal pension schemes are established and offered by insurance companies and banks.

Yes. Pension funds, insurance companies, and certain foreign institutions may act as pension providers. In addition, it is possible to use a flexible special-purpose pension provider, known as a Premiepensioeninstelling (PPI). Pension funds may only operate solidary defined contribution agreements and flexible defined contribution agreements. Insurance companies and PPIs may operate all three types of defined contribution schemes. However, PPIs are subject to restrictions: flexible defined contribution agreements may only offer a variable pension benefit, and the contribution benefit agreement may only be implemented during the accrual phase.

Since 2016, the general pension fund (in Dutch: Algemeen Pensioenfonds or APF) has been available. This type of pension provider is subject to fewer constraints than traditional pension funds and can, for example, be used for multiple pension schemes or to service foreign pension schemes.

Yes, but only in a very general sense for pension funds. There is a general legal requirement that adequate funding must be provided. The level of contributions actually required depends on the specifics of the funds and their schemes, or the contractual arrangements made with the insurance companies. Employers are not always required to make a contribution. However, most employers who make a pension contribution pay two-thirds of the total, while employees pay the remaining one-third.

Yes, however, the requirements differ depending on the type of defined contribution plan:

• Solidary defined contribution agreement: The premium is invested collectively. A solidarity reserve is a mandatory component and may be up to 15% of the pension fund assets. The solidarity reserve can be used to compensate for a decline in pension benefits or to increase pensions.
• Flexible defined contribution agreement: The premium is invested individually. The individual can choose between fixed and variable benefits. In most cases, including a risk-sharing reserve of up to 15% of the pension fund assets is optional. However, this is mandatory for pension provisions subject to the compulsory establishment of an industry-wide pension fund.
• Contribution benefit agreement: From fifteen years before the retirement age referred to in the AOW, it is possible to purchase a fixed pension benefit.

The general principle is that there is only one equal premium percentage for all participants. The flat-rate premium goes to the individual’s own capital or assets intended for retirement. The premium rate is an employment condition, but it can be no more than 30% of the pension basis.

Existing defined contribution plans with an increasing graduated scale may remain in place for all employees already employed as of 1 January 2028.

7. What age are benefits taken?

Occupational pension plans used to be based on a general target pensionable age. The payment of the AOW starts at an age that depends on the year of birth and general life expectancy. Starting in 2025, the state pension age will be linked to life expectancy and set five years in advance. The current state pension age is 67 years. From 2028, it will be 67 years and 3 months. The effective date of the pension can be brought forward, but by no more than ten years before the state pension age applicable in the relevant calendar year. Unless agreed otherwise (in which case some further conditions must also be met), this new pensionable age only applies to new pension benefits. Pension benefits accrued before 2014 may still be taken at 65, and those accrued before 2018 at 67, unless agreed otherwise. Individual alternative pensionable ages are usually also an option. As with the AOW, further increases in life expectancy may cause the target pensionable age for occupational pensions to rise in future. Early retirement is possible, but this option is severely restricted under the applicable tax regime. Benefits may also be postponed but, for tax reasons, must be taken for the first time no later than five years after the applicable pensionable age for the AOW. For defined contribution plans, it is no longer required that the entire pension capital is used to acquire pension distributions at the pensionable age. Instead, it may continue to be invested for a longer period, with the aim of increasing the return on investments and reducing the link between the amount of the distribution and (solely) the market interest rate at the date of retirement.

Employers, employees, or both, depending on the terms of the plan. Reimbursement of contributions may – in theory – be possible in the case of excess funds, but additional contributions may also be required, if this was agreed beforehand with the applicable pension provider, where the assets of defined benefit schemes have become inadequate to fund their obligations.

No. There are no specific registration requirements. However, for employees to benefit from tax-exempt contributions, the pension plan must be arranged by a qualified pension provider in line with tax rules.

No. Accruing pension is tax-facilitated. The deposited premium is not taxed and the accrued benefits are exempt from capital gains tax.

No, only indirectly via tax on the pension benefits.

12. Are benefits taxed?

Yes. Pension benefits, not when accrued but when paid, are subject to income tax of up to 49.50%.

Pension contributions may be deductible for corporation tax purposes for employers. Some types of private occupational pension plans offer advantages with the solidarity reserve and the risk-sharing reserve. Financial windfalls and setbacks are spread out.

Tax facilitation is limited. There is a maximum tax accrual rate. There is also a maximum pensionable salary, which is adjusted annually. For 2025, the maximum pensionable salary for tax purposes is EUR 137,800. Above that amount, pension can still be accrued, but the premium is taxed. Additionally, pension provisions include an AOW deduction, so no pension is accrued over the first part of the salary. The maximum premium is the fiscal limit, set at 33% of the pension basis until 2037.

There are two regulators with extensive powers: DNB (De Nederlandsche Bank) and the Authority for the Financial Markets (Autoriteit Financiële Markten or AFM). They supervise whether pension funds, insurance companies and PPIs comply with the rules. AFM monitors whether pension providers properly inform employees, pensioners and their ex-partners. DNB is the primary regulator and reviews the policies and solvency of pension providers.

Pension providers have extensive obligations to provide information. Furthermore, all relevant parties are required to report irregularities.

DNB and AFM may appoint a curator, who must be consulted by the board, at a pension provider. DNB may also request the appointment of an administrator at a pension fund, who assumes the authority of either the full board or certain members.

Yes. There is extensive legislation, reflecting EU Directives, that prohibits discrimination on a wide range of general grounds. Specific pension legislation also prohibits discrimination against unofficial spouses, employees with part-time or fixed-term contracts, and members who left before the pensionable age. The prohibition on discrimination does not apply to the admission age or pensionable age specified in pension provisions.

Except for certain conditional entitlements, all scheme members have vested entitlements, including early leavers. There is also an early retirement scheme (RVU), which allows employees to stop working up to three years before their state pension age. Employers are obliged to cooperate in this scheme if the employee meets the criteria. Employees can use the scheme until December 2025, with benefits payable until December 2028 at the latest. For early leavers, pension benefits must be actuarially recalculated, with a typical reduction of around 7% for each year of early retirement. Early leavers will not yet receive the AOW, but can make use of personal pension arrangements.

Representatives of employers, employees and pensioners must either be included in the management or supervisory boards of pension funds or, where these consist solely of professional managers, in the co-determination bodies of such pension funds.

Works councils and employee representation bodies may have a right to consent to or advise on the implementation, amendment or withdrawal of a pension scheme.

Yes. Both foreign insurance companies and foreign pension institutions may have members in the Netherlands if they meet certain requirements. Dutch pension providers may also service foreign plans and employees temporarily on secondment abroad. Cross-border transfers of entitlements are also permitted.

Yes. A switch is not possible without the consent of members, although various options may be available to avoid the need for such consent. In some cases, the works council or certain representative bodies of pensioners may also need to give consent or advice, and/or the co-determination formalities of pension funds may have to be followed. Consent of the works council is not required where there is mandatory membership in an industry pension fund or where pension provisions are set out in a collective labour agreement.