First pillar, Second pillar and Third pillar

As in many other European countries, the Dutch pension system consists of three pillars: the state pension (AOW), the supplementary work-related pensions and the private individual pension products that each person can arrange for him-/herself. In this section we elaborate on these three pillars.

First Pillar

The first pillar is the state pension (AOW). The state pension provides a basic income, the level of which is linked to the statutory minimum wage. Married couples and couples living together each receive 50% of the minimum wage (approximately € 13,000 gross per year in 2024). Pensioners living alone receive more, 70% of the minimum wage (approximately € 19,000 gross per year in 2024).

You are insured for the state pension if you live in the Netherlands or have lived there at some point. You accrue 2% state pension for each year that you are insured. You receive a full state pension if you have been insured throughout the 50 years before your state pension (AOW) age. 

The first pillar is a pay-as-you-go system. This means that the costs of the Dutch state pension benefits are paid by the workforce in the form of contributions. The Sociale Verzekeringsbank (SVB) carries out the AOW. Check their website if you want to know more about the AOW. All information is available in English.

Second Pillar

The second pillar consists of the work-related pension schemes. These pension schemes are administered by a pension fund (like the Unilever Pension Fund of which Forward is a part) or by an insurance company. Under Dutch law, companies and pension funds are strictly separated. Pension funds are legally and financially independent from the companies. The second pillar is financed by capital funding. This means that the pensions are financed from the contributions the employer and members of the scheme paid in the past and from the return on the investment of these contributions.

There are various forms of pension schemes in the Netherlands. More information about the Forward pension scheme you can find in Pensioen 1-2-3 in the website menu under 'Your pension scheme'.

Third Pillar

The third pillar is formed by individual pension products, such as an annuity insurance or via a tax-efficient blocked savings account. These are mainly used by the self-employed and employees in sectors without a collective pension scheme. But you can also use such a product just to accrue more pension. Individual pension products are bought at insurance companies or at banks. Anyone can purchase a product in the third pillar to meet his/her requirements. In this way, people can save extra pension, often taking advantage of tax benefits.