Pensioners in the Netherlands

  Just how well off are those over 65 in the Netherlands? A recent report on the future of pensions made for the Ministry of Social Affairs concluded that those over 65 will - in due time - be the wealthiest age group in the country.

Most pensioners in the Netherlands receive two bits of income - a basic old age pension (AOW) from the state plus a supplemental pension the individual built up during his working career. The AOW has doubled in purchasing power since 1964 - something the average income has not.

 

Almost 75% of the 2.5 million pensioners also have a supplemental pension. For about 34% this supplemental pension is a relatively modest amount - under the €500 (gross) per month. About 25% receives between €500 and €1500 a month and 15% receive more than €1500.

 

The average disposable income (after taxes and housing costs) per pensioned household rose from €16,000 to €22,000 between 2000 and 2008. The income of pensioned households where the breadwinner is under 70 years of age now comes out higher than the average of those household where the breadwinner is under 65.

 

The supplemental pensions built up by the worker via his employer - or privately if he is self-employed - thus pull in more than in the past. Nine out of every ten workers presently build up a supplemental pension via their employer in a pension fund. These pension funds will be paying out more and more in the coming years.

 

This is primarily due to an improved pension buildup, an average higher education and skills level and the higher related incomes on which these pensions are based. Also instrumental is the greater participation rates of women in the workforce - thus adding to the income of the pensioned household.

 

The Ministry of Social Affairs estimates that the incomes of those over 65 will increase by 11-14% by 2020. This estimate, however, assumes that pension payments are inflation indexed - something which has become uncertain in the past couple of years. Pension fund investments have soured as well as those made by private investors.

 

How far do these attractive average rates hide possible extremes at the left hand of the bell curve? The above mentioned study noted that the incidence of poverty among pensioners is lower (2.8%) than the poverty rate in the population at large (6.1%).