Changes in the Netherlands Pension System: What You Need to Know
In this blog we highlight the most recent updates regarding the evolving landscape of the Netherlands Pension system, and explain how these changes might impact your future pension benefits.
In light of the recent approval of the Future of Pensions Act, adjustments are planned to shape pension reforms, with effects from 1 July 2023. This blog aims to give you a comprehensive insight into these changes.
The Dutch Pension structure is anchored in three distinctive pillars, each carrying its own distinctive features:
- State Pension (Algemeen Ouderdoms Wet – AOW)
- Supplementary Pension Benefits through Employers: Accrued based on your employment.
- Private Supplementary Pension Benefits: Personal contributions for added security.
Changes on the Dutch Pension System:
Starting July 1st, 2023:
- The tax exemption for pension accrual in the private pension (third pillar) will be expanded from 13% to 30%. This adjustment allows self-employed workers to increase their pension contributions.
- The waiting period for pension accrual will no longer apply. This means that pension benefits in the second pillar will begin accruing from your start date, rather than waiting until the next month.
Effective January 1st, 2024:
- The minimum age for pension accrual will be lowered from 21 years old to 18 years old.
Looking ahead, the new pension system aims to provide a clearer understanding of your contributions and accumulated assets. This insight will give you a better grasp of your future pension, as the premium percentage paid will directly impact your personal pension.
The transition also involves transitioning to a defined contribution plan. This means that the monthly premium will be equal for everyone, eliminating the degressive structure when you become older.
Important: If you are employed through Parakar, the equal premium percentage for all ages was already applicable as you are registered under the Adequate Pension Plan.
The above mentioned changes also contribute to that switching jobs and/or becoming unemployed will not majorly influence your pension accrual anymore. This adaptation reflects the evolving work landscape where individuals may not spend their entire career with a single employer.
Navigating Forward: What Steps Are Required?
For the transition to the Netherlands new pension system, you don’t need to do anything.
However, it might be a good idea to check your contact information with the (possible) various pension providers and make sure that everything is filled in correctly. By this, any information about the transition of the new pension plan can reach you properly.
If you have any questions or need further clarification, please do not hesitate to reach out to our dedicated team of HR experts by the button below.
