Pension in three tiers.

Pension in three tiers.

Pension. Every entrepreneur who employs people will have to deal with it. Did you know that a pension is the most sought-after employee benefit? An effective pension scheme can therefore be an attractive tool. Not only to retain and motivate your employees, but also to recruit new employees.

But how can you find out what kind of pension best suits your organisation? In order for you to make a well-informed choice, we are more than happy to tell you how the Dutch pension system works.

The three tiers of the pension system

How we arrange pensions in the Netherlands is referred to as the pension system. The pension system consists of three tiers: a state pension, an occupational pension, and supplements that you may arrange for privately.

1st tier pension: the government (state pension)

The first tier of the Dutch pension system is provided by the government. Every Dutch citizen receives a basic state pension. This is laid down in the Dutch General Old-Age Pensions Act (AOW). The age at which the state pension starts to be paid is currently 65 years. In the coming years, the state pension age will be increased in steps to age 67.

In addition to the state pension, there are other situations in which the government pays out a pension: occupational disability and death. In the latter case, your surviving dependants will receive a pension. This means that your surviving partner (and/or your child) will receive a monthly payment.

2nd tier pension: the employer (occupational pension)

Most employees in the Netherlands accrue a pension through their employer. This is the second tier of the pension system.

Employers are often required to operate their pension scheme through a pension fund. If this is not the case, you can operate a group scheme for your employees  through a pension insurer.

3rd tier pension: private

In addition to the state pension and occupational pension, employees can also individually arrange for an extra pension supplement. This may be the case, for example, if the state pension and occupational pension are not sufficient to continue the same lifestyle. The employee can supplement his or her pension by saving, by investing or, for example, by taking out annuity insurance.