How the Dutch pension system works in 2025 (for expats)

Planning to finally take a proper look at your retirement finances? Good idea – starting early gives you more options. Before you dive in, it helps to understand how the Dutch pension system is built. The Netherlands uses three “pillars”. Below we explain what they are, how they work, and where you may have room to build extra pension yourself.

The three pillars at a glance

1. State pension (AOW)
   
   
   
   
2. Pension via your employer
   
   
   
   
3. Individual pension arrangements
   
   
   
   

Pillar 1: the state pension (AOW)

The AOW is the basic state pension. It was introduced in 1957 as a “floor” to supplement other income. Today, the amount you receive depends on your living situation and is linked to the minimum wage: if you live alone, your AOW is based on 70% of the net minimum wage; if you live with a partner, each of you is based on 50% (together up to 100%). The exact euro amounts change twice a year. You can check the current AOW percentages and amounts online.  

Your AOW start age depends on your date of birth. For people reaching AOW age in 2025 and the next few years, the legislated age is 67 (rising to 67 years and 3 months from 2028 for certain birth cohorts). Use the government’s checker to see your exact AOW age

New to the Netherlands or lived abroad for a while? Your AOW may be reduced. You accrue 2% of a full AOW for each year you are insured under the AOW (generally when you live or work in the Netherlands). For each year you were not insured, your future AOW is reduced by 2%. You can sometimes fill gaps via voluntary insurance; see the official guidance.

Useful: if you have or will have AOW but live outside the Netherlands, check the special information for AOW abroad. 

Pillar 2: pension via your employer

Besides AOW, most employees build pension through their employer. Around 90% of Dutch employees are covered by an occupational pension scheme administered by a pension fund, insurer or PPI. In many schemes the employer pays roughly two-thirds of the contribution and the employee about one-third, but the exact split varies by sector and fund. Pension providers invest the contributions for you. 

You can see what you’ve already built up (including AOW) by logging in to the official pension register at My Pension Overview (DigiD required). 

The new pension law

The new Future of Pensions Act took effect on 1 July 2023. Funds and employers are moving to the new system during a transition period; they must agree the changes by 1 January 2027 and complete the move afterwards according to their transition plans. The aim is to make investment and benefit adjustments more flexible and fair across generations.

Pillar 3: individual pension arrangements

AOW plus workplace pension won’t always meet your target retirement income—especially if you moved to the Netherlands later in life, changed jobs several times, or work for an employer without a pension plan. That’s why you can also build additional pension yourself.

Annual margin (jaarruimte)

Each year, the tax system gives you limited room to save for retirement in a qualifying product (such as a Dutch “lijfrente” savings or investment account) and deduct that contribution from your taxable income. Since the 2023 reform, annual margin is more generous (up to 30% of your pensionable income, subject to conditions). Calculate your 2025 annual margin and/or unused annual margin with this handy calculator.

Important: to receive the tax benefit, you must contribute within an eligible pension product that is locked until your retirement date. Early withdrawals usually trigger tax and penalties; exceptions are limited. It’s recommended to read up on the current annuity (lijfrente) rules.

Unused annual margin (reserveringsruimte)

Didn’t use your annual margin in previous years? You can carry it forward for up to 10 years (increased from 7 under the 2023 law). There is an annual maximum for how much carry-forward you may use; check the current cap for 2025 in the Tax Administration’s guidance. You can also calculate this sum for yourself using the Peaks annual margin calculator, linked below.

Handy links

• Check your AOW age and see current AOW percentages/amounts.
  
  
  
  
• See everything you’ve accrued in pillars 1 and 2 at Mijnpensioenoverzicht.nl (English available)
  
  
  
  
• Calculate your annual margin (jaarruimte) and unused annual margin (reserveringsruimte) with the Peaks annual margin tool and spreadsheet.

Please note that Peaks (and many other investment platforms) are execution-only providers and do not give financial advice; seek advice if you’re unsure. Investing involves risk. Values can go down as well as up; you could lose some or all of your money.