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Netherlands

Pension System

The top nine pension systems in the world are from nations with populations with less than twenty-five million people. The Netherlands are in the first place for having the best pension system, according to the Melbourne Mercer Global Pension Index (MMGPI). 

 

The Dutch pension system consists of three pillars: a flat-rate state pension (AOW) related to minimum wages and financed via payroll taxes, occupational pension schemes which are capital-funded, and individual saving schemes.

 

The Dutch General Old Age Pensions Act (AOW) provides a basic state pension for people aged 65 and older. Additionally, it includes a supplementary allowance for beneficiaries who are younger than 65 and have either no income or an income below a certain level. 

 

The Dutch Surviving Dependants Act (ANW) provides for state benefits for widowed people and for children younger than 16 who have lost one or both parents. Supplementary are the occupational non-statutory pension schemes. The employer pays more than fifty percent of the pension contributions. This system of supplementary pension schemes has a rich history and is the backbone of the old-age pension system in the Netherlands. In per capita terms, the Netherlands has one of the largest pension reserves in the world. 

 

The third pillar includes the personal yearly payments offered by insurance providers, supplementary to the AOW and/or the occupational pensions. 

 

According to the OECD, retirees in the Netherlands can expect 101 percent of the level of earnings they enjoyed as workers. This compares to 29 percent for the UK and 63 percent for the average OECD country.

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