The Dutch pension system is often cited as one of the best in the world. But for expats, it can be confusing — especially when it comes to understanding what you are entitled to, what happens when you leave the Netherlands, and how it interacts with pension systems in other countries.
This guide breaks down the three pillars of the Dutch pension system and explains what each means for your retirement planning as an expat.
The Three Pillars of Dutch Pensions
The Netherlands uses a three-pillar pension system:
- Pillar 1: AOW — the state pension, funded by taxes
- Pillar 2: Employer pension — occupational pensions arranged through your employer
- Pillar 3: Private savings — individual retirement savings and investments
Most Dutch residents build their retirement income from all three pillars. As an expat, the details of each pillar and how they apply to you depend heavily on your employment situation and how long you plan to stay.
Pillar 1: AOW (Algemene Ouderdomswet) — State Pension
The AOW is the foundation of Dutch retirement income. It is a flat-rate benefit paid to everyone who has lived or worked in the Netherlands, regardless of their actual earnings.
How AOW Accrual Works
You build up AOW entitlement at a rate of 2% for every year you live or work in the Netherlands between age 15 and the AOW retirement age (currently 67 years and 3 months, gradually increasing). After 50 years of accrual, you receive 100% of the AOW benefit.
The full AOW benefit in 2026 is approximately:
- Single person: approximately €1,350-1,400 gross per month
- Couple (both receiving AOW): approximately €920-950 gross per person per month
What This Means for Expats
If you live in the Netherlands for 10 years, you will accrue 20% of the full AOW benefit (10 years × 2%). This means you would receive approximately €270-280 per month at retirement age — not life-changing, but not insignificant either, especially since it is indexed for inflation.
Key points:
- AOW accrues automatically — you do not need to sign up or contribute separately. It is funded through payroll taxes (AOW premie) deducted from your salary
- You can receive AOW regardless of where you live at retirement age — even if you have left the Netherlands
- EU social security agreements and bilateral treaties can affect how AOW interacts with state pensions from other countries
Gaps in AOW
Every year you are not resident in the Netherlands (or not paying Dutch social security contributions) creates a gap of 2% in your AOW entitlement. For expats who arrive in their 30s or 40s, this means you will never reach the full 100%.
You can voluntarily buy back up to 10 years of AOW through the SVB (Social Insurance Bank), but this must be done within specific timeframes and can be expensive. The decision depends on your overall retirement planning and expected state pension from other countries.
Pillar 2: Employer Pension (Pensioenregeling)
The second pillar is where the Dutch pension system really shines. Most employers in the Netherlands are required to offer a pension scheme, and these can be very valuable.
How It Works
- Your employer selects a pension fund or insurance company
- Both you and your employer contribute — the employer typically pays 2/3 and you pay 1/3 of the total contribution
- Contributions are tax-deductible (deducted from your gross salary before income tax)
- The money is invested and grows tax-free until retirement
- At retirement, you receive a monthly pension income based on your accumulated rights
Types of Pension Schemes
Under the recent pension reform (Wet toekomst pensioenen, or WTP), the Netherlands is transitioning from defined benefit to defined contribution schemes:
- Defined contribution (new standard): your pension depends on contributions made and investment returns. This is what most new arrangements will look like
- Defined benefit (legacy): your pension is based on your salary and years of service. Some existing schemes are still transitioning
The Franchise
The franchise (franchise) is the portion of your salary that is excluded from pension accrual because it is assumed to be covered by AOW. In 2026, the franchise is approximately €17,500. Only salary above this amount counts toward your employer pension accrual.
Contribution Rates
Typical total contributions (employer + employee) range from 15-25% of the pensionable salary (salary minus franchise). Your contribution is usually deducted directly from your gross salary, reducing your income tax.
Pillar 3: Private Savings (Lijfrente and Investments)
The third pillar covers voluntary individual retirement savings. This is particularly important for expats who may not build up a full AOW or who have gaps in employer pension coverage.
Lijfrente (Annuity Insurance)
A lijfrente is a tax-advantaged retirement savings product:
- Contributions are deductible from your Box 1 income (up to annual limits based on your "pension gap")
- The money grows tax-free
- At retirement, the payout is taxed as income
- Available through banks and insurance companies
- Particularly valuable for freelancers/ZZP'ers who do not have an employer pension
The annual maximum deduction depends on your income and existing pension accrual. A tax advisor can calculate your specific limit.
Investing Independently
Beyond formal pension products, you can build retirement wealth through regular investing in ETFs and index funds. This money falls under Box 3 wealth tax rather than pension-specific tax rules, but it offers more flexibility — you can access it at any time, not just at retirement.
What Happens When You Leave the Netherlands?
This is the question most expat minds jump to. Here is what happens to each pillar:
AOW
- Your accrued AOW rights are preserved — you will receive them at retirement age regardless of where you live
- Accrual stops when you leave (unless you continue to work for a Dutch employer or voluntarily insure)
- You can claim AOW from abroad when you reach the retirement age
- Check with the SVB about voluntary continued insurance if you want to keep accruing
Employer Pension
- Your accrued pension rights are preserved in the Dutch pension fund
- You will receive the pension at retirement age, paid to your bank account wherever you are
- Small pensions (below a threshold called the "afkoopgrens," approximately €550/year) can be bought out — the fund pays you a lump sum
- Value transfer: in some cases, you can transfer your Dutch pension to a pension scheme in your new country. This is possible within the EU under certain conditions but can be complex and is not always advisable
Private Savings (Lijfrente)
- Lijfrente products typically remain with the Dutch provider until maturity
- Early withdrawal may trigger tax penalties and repayment of previously claimed deductions
- Investment accounts (non-lijfrente) can usually be maintained or transferred to brokers in your new country
Checking Your Pension Accrual
The Dutch government provides an excellent tool for checking your total pension picture:
Mijnpensioenoverzicht.nl (My Pension Overview) shows:
- Your accrued AOW entitlement
- Your employer pension(s) from current and previous Dutch employers
- An estimate of your total retirement income at age 67
- Any gaps in your pension coverage
You need your DigiD to access this website. We recommend checking it at least once a year to understand your retirement trajectory.
Pension Tips for Expats
- Understand your employer's scheme: ask HR for a clear explanation in English. Know your contribution rate, the investment options (if any), and the projected pension at retirement
- Consider voluntary AOW insurance: if you leave the Netherlands, you can voluntarily continue AOW accrual for up to 10 years. Contact the SVB within 1 year of leaving
- Check for pension treaties: the Netherlands has bilateral social security agreements with many countries. These can prevent double contributions and ensure pension rights are preserved
- Keep records: save all pension correspondence, UPO (Uniform Pension Overview) documents, and employment contracts. You may need these decades later when claiming your pension
- Do not cash out small pensions impulsively: even a small Dutch pension of €200/month is €2,400/year, indexed for decades. The long-term value may surprise you
- Start Pillar 3 early: whether through lijfrente or regular investing, do not rely solely on AOW and employer pension — especially if your time in the Netherlands is limited
- Consult a cross-border pension specialist: if you have pension rights in multiple countries, a specialist can help optimize your overall retirement plan