Dutch households achieve an average retirement replacement rate of 60 per cent through a combination of the state pension (AOW) and supplementary pensions, according to De Nederlandsche Bank (DNB).

However, if savings are also included, the figure is 63 per cent and if total assets include equity within homes, the figure sits at 78 per cent. DNB noted, however, that accumulated pension varies greatly between types of workers and socioeconomic groups.

Analysis by DNB was undertaken for an interdepartmental policy study (IBO) on pensions accrual by the Dutch government. In it, officials from various ministries examined whether pension accrual is balanced and listed policy options to improve it.

DNB found that the average household has a pension income from the first three pension pillars of about €33,000 gross per year. This means that these households will still receive 60 per cent of their ‘average pre-retirement income’ after retirement – the replacement rate.

In its analysis, DNB also looked at the change in income after retirement. It found that low-income households can continue to receive more than 80 per cent of their former income with pension income from the first three pillars. For these people, the state pension (first pillar) is the main source of income after retirement.

For higher incomes, the second pillar is a relatively important component, as well as the fourth pillar – assets.

“Wealth consists of financial assets, such as savings, which can be deployed relatively easily, and other forms of wealth, such as the excess value of one's own home or money in one's own business. Relatively few people use voluntary retirement savings products (third pillar). As a result, these are barely visible in the graph,” DNB stated.

“Especially for the self-employed, it can be difficult to continue living after retirement without using their assets. The expected retirement income from the first three pillars is 46 per cent of previous income, compared to 59 per cent for employees. Using the higher equity in the home or business for retirement, retirement income for the average worker and the average self-employed person is about the same.”

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