2021 sees unprecedented increase in Dutch pension contributions

2021 sees unprecedented increase in Dutch pension contributions

Following an investigation conducted by the Financiele Dagblad (FD) and PensioenPro, it has been revealed that pension contributions in the Netherlands are experiencing a record-breaking increase in 2021, with some increasing by more than 10 percent. 

Dutch pension contributions to rise in 2021

The investigation revealed that millions of people in the Netherlands are receiving less pension in spite of their higher contributions. At 39 of the 44 Dutch industry-wide pension funds, pensions have become more expensive, as funds increase their contributions and / or cut their pension accrual. This will affect around five million people.

Five years ago, the contributions - or premiums - charged were around 20 percent of the pensionable earnings - this has now risen to between 25 and 30 percent. This means that for people working in the Netherlands, their retirement costs them an average of one and a half days' work a week. Jeroen Koopmans, partner at pension advisor LCP, said that an increase such as this one had never been seen before.  

What does this mean for people working in the Netherlands?

According to the FD, the rise is due to the recent significant fall in interest rates, and because pension funds expect lower returns on investments. Hairdressers are seeing the highest increase (36 percent), and those working in healthcare will see their contributions rise by 12 percent, while supermarket employees see theirs rise by 27 percent. These increases will affect both employer and employee: the employee typically pays one-third of the total contribution, with the employer paying the rest.

Some funds have (also) opted to reduce the maximum pension their members can accrue, a decision which will mostly affect employees. The AWVN employers' association says the rising cost will mean one of two things for workers: a lower net wage if the employee foots the bill, or less chance of a salary increase if the employer covers your contributions.

Last summer, Minister for Social Affairs Wouter Koolmees asked pension funds to keep the contributions in 2021 the same as in 2020, as far as possible. But according to the funds, this wasn’t possible: “We can’t do it any other way unless the cabinet makes the current rules more flexible,” said Henk van der Kolk, chairman of the retail pension fund.

Risk of pension cuts over the coming years

According to ABP and PMT - two of the largest pension funds in the Netherlands - millions of people risk their pensions being cut over the coming years because of the low interest rates and strict pension rules: "Based on the current rules, there is a real chance of a cut in the coming years," Corien Wortmann, chairman of ABP, the largest pension fund in the Netherlands, told the AD.

The Dutch government is currently developing a new pension system, which will come into effect in 2026. The new system should mean that pensions can be increased more easily and more regularly, but the upcoming transition period is leaving funds worried they will have to make cuts.

The current system hinges on interest rates - something that will change in the updated Dutch pension system - meaning that funds are required to keep more cash in their reserves in order to cover current and future pensions. If the interest rate stays low, funds will have to keep even more money on hand, threatening the future of millions of pensions.

Victoria Séveno


Victoria Séveno

Victoria grew up in Amsterdam, before moving to the UK to study English and Related Literature at the University of York and completing her NCTJ course at the Press Association...

Read more



Leave a comment