AOW for expats: acquiring State pension in NL
If you live or work in the Netherlands, you usually accrue a basic pension from the Dutch government (AOW). You are entitled to payment of the accrued amount if you are of legal age to stop working. Do you live and work as an expat in the Netherlands? Then read in this article whether you accrue AOW for expats and how you can have it paid out.
What is AOW?
In the Netherlands, everyone accrues AOW: the government guarantees a basic income when you reach retirement age. In addition, if you work as an employee, you usually also accrue pension. Your employer pays pension to a pension fund or insurer which pays out (on top of the AOW) when you are retired. You can consider this pension as a supplement to the AOW. Entrepreneurs in the Netherlands must arrange a supplementary pension themselves. Usually this happens with an annuity policy with an insurer. But if you are working (as an expat) for a Dutch employer, this will probably deduct AOW (and pension) from your salary. You will be entitled to this later.
Accrual of AOW for expats
If you work in the Netherlands, it is customary for your employer to insure you for AOW with the Dutch Social Insurance Bank, and to pay 2% of your annual income for this. Even if you do not work in the Netherlands but live here and are entitled to it, you can accrue AOW. You do not have to arrange anything for this yourself. In the fifty years before you reach retirement age, you accrue AOW.
AOW pension age
You are entitled to benefit from the AOW if you reach the AOW pension age. In 2022 this will be 66 years and 7 months. With the increase in life expectancy, the state pension age also rises. The Dutch government always determines the AOW-0 entitlement age for the next five years. Currently, this will increase to 67 years in 2024, and will remain 67 through 2027. Will it take longer than 5 years before you retire? You can calculate what your expected AOW pension age is by entering your date of birth here .
How is AOW paid out?
If you live in the Netherlands when you reach the AOW pension age, you will be notified of the AOW benefit prior to your AOW pension, and it will be paid automatically. But if you live abroad and have worked in the Netherlands, you must apply for the AOW yourself. For timely benefit, you do this six months before you reach the AOW pension age. Do you live within the EU, or in Iceland, Liechtenstein or Norway (EEA countries)? Then you apply for the AOW from the authority that regulates the pension in the country where you live. If you have been an expat in the Netherlands and live in a treaty country at the time of retirement , the Netherlands and this country have made agreements about the benefit of AOW. You will also contact the paying authority in your own country. If you do not live in an EU, EEA or treaty country, please contact the SVB. This is the organization that regulates AOW in the Netherlands. You can also go here if you do not know which authority to approach in your own country.
The amount of AOW
The amount of the AOW pension that you will receive depends on a number of factors. Firstly, it looks at the length of the period in which AOW is accrued in the Netherlands. But also, for example, your living situation, the country where you live and marital status influence the amount you receive. Finally, the AOW amount is adjusted every six months to, for example, inflation. To give an indication of the amount of the AOW: A single person who has fully accrued AOW in the Netherlands will receive more than € 1,000 AOW per month in 2022. Someone who lives together in the Netherlands under the same circumstances gets just under € 700,-.
Further information
Do you want to read more about AOW? For expats, this English-language website of the Dutch government is a good starting point. Lexlupa previously wrote articles about AOW and annuity. Do you want to know in which country you are liable to tax as an expat? Then read on here.