More Than 3 Million Pensioners in NL

Baby boomers born in 1946 reached the age of 65 in 2011. The first of them received their first state pension in March and April 2011.

The increase in the number of state old age pension was substantial. The number of pensions paid in February 2011 rose by just over 7 thousand, in March to May the increase was 14 thousand per month. In June it was 12 thousand and in July 16 thousand. At the end of September, 2.99 million people were entitled to a state old age pension.

Costs of state pension rising strongly

The influx of the baby boom generation has driven up the costs of state pensions substantially. In the last few years, spending on state pensions has risen by more 
than one billion euro annually, and in the next few years a larger increase is expected as a result of the large number of baby boomers reaching retirement age. In the first half of 2011 the Dutch government spent 15.8 billion euro on pensions, 0.9 billion euro more than in the first half of 2010.

Pension entitlements

It is still unclear what the exact income effects of retirement will be in the future. Model calculations of the value of future pension entitlements show that for most men, at the age of 65 state old age pension will equal no more than 20 to 25 percent of their present income. The second pillar of the Dutch pension system, pensions saved via employers, will replace about 35 to 50 percent, depending on age. So state old age pension and pension from employment are enough to replace about 60 to 70 percent of the former wage. These replacement rates differ between groups: for employees the rate is 72 percent, for self-employed it is 31 percent.

This amount can be supplemented by income from annuities and assets (own home, savings, securities). To be able to replace their income completely, pensioners will have to supplement the first two pillars to around 80 percent of their former income. The remaining 20 percent is accounted for by the lower tax rates for pensioners.

For women, the state old age pension replaces more of their income. Because of the lower participation rates and lower wages of women over 55, state old age pension will equal as much as 55 to 70 percent of their present wage.