Chapter VI: Old-age

Netherlands VI

Exemptions from compulsory insurance

Taxation and social contributions

Applicable statutory basis

General Old-Age Pensions Act (Algemene Ouderdomswet, AOW).

Basic principles

System of universal coverage, financed with contributions on earned incomes.

Compulsory supplementary pension schemes for employees based on agreements between social partners.

Field of application

All residents under 65 whatever their income or nationality. All persons under 65 who work in The Netherlands and consequently pay tax on wages, are also insured.

Exemptions from compulsory insurance

None

Conditions

1. Minimum period of membership

No qualifying conditions.

2. Conditions for drawing full pension

Entitled to a full pension is the person who has been insured between his 15^th and 65^th birthday. A 2% reduction is made on the full pension for each year of non-insurance.

3. Legal retirement age

Standard pension

65 years.

Early pension

None.

Deferred pension

None.

Benefits

1. Determining factors

Length of insured periods, family status.

2. Calculation method or pension formula

Pension:

Single person: NLG 1,684.70 (EUR 764) per month;

Married and unmarried persons, both 65 and over (also 2 men or 2 women sharing a household): NLG 1,162.27 (EUR 527) per month for each person;

Pensioners with a partner younger than 65:

if the AOW-pension took effect before 1 February 1994: NLG 1,684.70 (EUR 764);

if the AOW-pension took effect on 1 February 1994 or later: NLG 1,162.27 (EUR 527).

Full pension payable after 50 years of insurance. For every year in which there was no insurance, an amount of 2% of the full pension is deducted.

3 Reference earnings or calculation basis

Not applicable.

4. Noncontributory periods credited or taken into consideration

Not applicable.

5. Supplement for dependants

Spouse

Pension supplement (toeslag) according to income of the spouse in case the spouse is younger than 65 years.

Children

None.

6. Special supplements

Supplement (toeslag):

If the AOW pension took effect before 1 February 1994: Pensioners with a partner younger than 65 who earns less than NLG 1,319.43 (EUR 599) gross per month, can receive a supplementary benefit of maximum 30% of the minimum wage - gross NLG 639.84 (EUR 290).

If the AOW pension took effect on 1 February 1994 or later: Pensioners with a partner younger than 65 who earns less than NLG 2,103.06 (EUR 954) gross per month, can receive a supplementary benefit of maximum 50% of the gross AOW pension for married persons = NLG 1,162.27 (EUR 527).

Pension + maximum supplementary benefit: NLG 2,324.54 (EUR 1,055). Single-parent family: NLG 2,088.14 (EUR 948) per month.

In addition a holiday allowance (vakantie-uitkering) amounting to NLG 132.70 (EUR 60) per month for couples - each partner NLG 66.35 (EUR 30), NLG 92.88 (EUR 42) per month for single persons and NLG 119.42 (EUR 54) per month for one-parent family is paid.

7. Minimum pension

Not applicable, flat-rate pension benefits.

8. Maximum pension

Not applicable, flat-rate pension benefits.

9. Early pension

None.

10. Deferment

None.

Adjustment

Adjustment on 1 January and 1 July in accordance with the average development of contract wages.

Partial pension

None.

Accumulation with earnings

Possible. The amount of the pension supplement depends on earnings of the partner younger than 65.

Taxation and social contributions

1. Taxation of pension benefits

In general, benefits are fully liable to taxation like other types of income, i.e. wages.

2. Limit of income for tax relief or tax reduction

The income tax structure is progressive. In general, taxation applies if a certain minimum income is exceeded.

3. Social security contribu tions from pension

Social insurance contributions for the General Surviving Relatives Act (Algemene nabestaandenwet, Anw), the Exceptional Medical Expenses Act (Algemene wet bijzondere ziektekosten, AWBZ) and, in some cases, the Health Insurance Act are deducted from pensions.