What is a pension?

A pension is a financial arrangement that provides you with an income when you retire and is nothing other than future income. Here are the key points about pensions:

• Contributions: this is money regularly set aside (usually monthly) by an individual and/or their employer during the individual's working life.
• Investment: the contributions are typically invested to grow over time, increasing the value of the pension fund.
• Retirement Income: when you retire, you receive an income from the pension fund.
• Types of Pensions: there are various types of pension schemes, including state pensions, workplace pensions, and personal or private pensions.

The Netherlands has a well-structured pension system that is often described as having three pillars, each serving a different purpose in providing financial security during retirement:

1. First Pillar - State Pension (AOW): this is the basic state pension provided by the government. It's a flat-rate pension to which every resident contributes and is entitled to receive when they reach state pension age. The amount received is linked to the minimum wage, with couples each receiving 50% and single pensioners receiving 70%. To be entitled to the full state pension, a person would need to have lived in the Netherlands for 50 years prior to reaching the state pension age.
2. Second Pillar - Workplace Pension: This pillar consists of pensions accrued through employment. It's often a defined benefit scheme based on a formula linked to average earnings over the accrual period and length of employment. Contributions are typically made by both the employee and the employer, with the employer often contributing a larger share.
3. Third Pillar - Individual Pension Products: This optional pillar allows individuals to arrange their own private pension through personal savings or insurance products. These can be tailored to meet personal retirement goals and can supplement the first two pillars, especially if one has not accrued a full occupational pension.

These three pillars work together to provide comprehensive coverage, ensuring that individuals have a variety of income sources in retirement. It’s important that you understand your pension arrangements as this will help you make decisions and take the right action. To help you, information is provided on this website. You can also consult the English-language brochure for more information.

These pages do not contain any personal information relating to your pension. That can be found at www.mijnpensioenoverzicht.nl (which provides a calculate to het an idea of the pension you could receive once you reach statutory pensionable age) and in the Uniform Pension Overview (UPO) that you receive from Provisum every year.

If you have questions which are not covered, please contact Provisum on 020-6213 891 or via email at info@provisum.nl. Don't forget to include your full name and date of birth in your email.