Pension target of 70 percent not within everyone's reach

The Dutch pension system is based on an old age pension of 70 percent of people’s current wages. But this is not attainable for everyone. For older employees in particular the attainable pension will be much lower.

Attainable pensions of employees, 2005*

Low incomes not reduced by much

After retirement, people’s income consists of AOW, which is the national old age pension scheme that is the same for everyone, plus a work-related part that employees have built up in the course of their careers.
 
People on a low income do not build up much work-related pension. For this group the AOW forms a relatively large part of their income after retirement, which compensates the reduction in wages to a large extent.

Women have lower pensions

This effect can be seen especially in women’s pensions that can be attained. Women, on average, earn less than men, often because they work part-time and in lower paid jobs. This makes the pension they can attain relatively high in relation to their wages.

However, expressed in euros the pensions that female employees can attain are substantially lower than those of men. The gap is even greater in the older age brackets, because women in those age brackets worked less.

Also the built-up pensions of women are substantially lower than those of men. This difference applies to all ages.

Built up pension provisions by employees, 2005*

Lower pensions for people over 55

For employees aged over 55 the attainable pension as a percentage of their wage is lower than for younger people. This is in the first place because some of the people over 55 with a high pension build-up retire before the age of 65. This reduces the average build-up of the older people who continue to work.

This generation also may have a worse pension build-up since they could not start building up their pension rights in every sector of industry. Also, they often could only start building up pension rights at the age of 25. Moreover, changing jobs led to substantial breaks in pension rights as well.

Attained pension levels of employees, 2005*