After years of discussions, the government and the organizations of employers and employees in the Netherlands reached a national pension agreement in June 2019. In this agreement, they made arrangements for the AOW (state pension) age, the possibilities for early retirement for people with an arduous occupation, the supplementary pensions and the pensions for self-employed professionals.

AOW age will increase at slower rate
The AOW age will be frozen at the current level of 66 years and four months for the next two years. Thereafter, the AOW will increase in steps of three months to age 67 in 2024. Subsequently, the AOW age will be linked to the life expectancy. If there is an increase, the AOW age will no longer increase by one year as in the past, but by eight months.

The agreed schedule for the AOW-age for the coming years is:

2020 66 years and 4 months
2021 66 years and 4 months
2022 66 years and 7 months
2023 66 years and 10 months
2024 67 years


Three years earlier retirement for employees with arduous profession
There has been much discussion about possibilities for people with an arduous profession to retire earlier. At an earlier stage, the parties involved did not succeed in drawing up a list of arduous professions such as this was done in Belgium. There will not be such list now either. The intention is that employers and employees determine in the collective labor agreements who qualify for an arduous profession. Those employees can retire three years before their AOW age. So far, an extra tax was levied if someone retired before the AOW age. This was to discourage early retirement. This extra tax will be abolished up to a gross annual income of € 19,000 as of 2021. The extra tax will remain for the salary about that level. This tax measure should make it easier for employees to advance their retirement a few years.

Pension will be less secure and standard contribution disappears
There are a number of important changes for the pensions that employees accrue with their employer. These pensions will be less secure. As a result, pension funds need no longer have substantial buffers for setbacks. This makes it easier to grant indexation in good times. On the other hand, pension cuts can occur at an earlier stage in times of economic adversity.
Another important change is that the standard contribution is abandoned. Currently, younger and older employees pay the same contribution. Younger employees actually pay too much as their contribution can still generate investment returns for a long time, while older employees pay too little. In the new system, the contribution will immediately be used for your own pension accrual. That is favorable for younger employers. Employees of 40+ need to be compensated and further consultation is needed how this compensation will be financed.
In addition, there are other changes such as a more uniform approach of the surviving dependents’ pension and the possibility to receive 10% of the total pension in a lump sum at the retirement date.

No mandatory pension for self-employed professionals
The growing number of self-employed professionals will have to take out a mandatory disability insurance. However, they will not be obliged to have a pension plan. It will be made easier for self-employed professionals to join a pension fund or another pension institution on a voluntary basis. In this connection, the variable income of the self-employed professionals will be taken into account when creating possibilities for a variable contribution.

Follow developments
Many of the plans need to be worked out in more detail. This may take quite some times. The Executive Board of the DEPF is closely monitoring all the developments.