The Dutch Federation of Pension Funds
We represent Pension funds and consumers
The Pension Federation is the association for nearly all Dutch pension funds. On behalf of 141 pension funds, it represents the interests of:
The Dutch pension system
The Dutch pension system is one of the best in the world. Poverty amongst older people is very low and retirement income is high for most people in the Netherlands. This is due to the way retirement provision is organised.
A strong feature of the Dutch pension system is the combination of multiple pension pillars. The state pension (‘AOW’) as the first pillar pays a basic pension provision at minimum level to all residents of the Netherlands, regardless of their work. In the second pillar, pension funds take responsible investment risk to provide additional pension income for the vast majority of employees. Strong qualities of pension funds include solidarity, collective risk-sharing, a not-for-profit character and permanent attention to cost control. At more than 1.600 billion euros, capital-funded pension assets amount to 160% of the Dutch gross domestic product.
Multi-pillar pension systems create more robust pension results. State pensions are vulnerable to ageing, but depend less on financial markets. This is the reverse for funded occupational and private pensions. In general, the combination leads to a better distribution of risks.
The Dutch pension system is based on three strong pillars.
The first pillar is the General Old-Age Pensions Act (AOW) paid to everyone living in the Netherlands, once they have reached the qualifying age. The AOW age is 67 years and 3 months as of 2025, and will increase along with the development of life expectancy in the Netherlands. Residents of the Netherlands accrue 2% of their AOW every year for 50 years until reaching the required age. They do not have to be in paid work to accrue AOW. The AOW should be seen as a basic provision at minimum level. The AOW is administered by the Ministry of Social Affairs and Employment and is funded from tax revenues: it is a pay-as-you-go system.
The second pillar consists of the occupational pensions accrued by the vast majority of employees. The second pension pillar is an employment benefit. Employees and employers pay the contribution agreed in collective employment agreements into a pension fund. This may be a pension fund for all businesses in a particular industry, a fund that works for one specific company, or a fund for a group of people working in a certain profession. Participation in an industry pension fund may be made mandatory for the entire sector by the Minister of Social Affairs and Employment. Participation is mandatory for most industry pension funds. Next to providing income-replacement in old age, pension funds also provide in a partial income in case of incapacity and partial income for the widowed partner and/or orphaned children in case of death of the participant.
The third pillar consists of individual banking or insurance products for which contributions can be paid in for accrual of a pension. This is important mainly for those people who do not accrue a pension in the second pillar.
Pension reform: the new Dutch pension Law
As in many European countries, the Dutch population is ageing. Dutch people live longer and therefore enjoy their retirement for longer. That means a smaller working population has to pay for the pay-as-you-go pensions of a growing group of retired people. Moreover, employment relations are changing, including a growing group of freelancers who accrue no occupational pensions.
The government and social partners have worked at a major pension reform for over a decade. The new occupational pension law (Wet Toekomst Pensioenen) has been in force since 2023. Strong features of the Dutch occupational pension system, such as solidarity, collective risk-sharing and mandatory participation are maintained. The new system increases transparency and flexibility, better suits the changing labor market and provides more personal choice.
A key change is a shift from collective defined benefit schemes to collective defined contribution schemes. In the old system, workers are promised a pension benefit based on their contribution and years of participation. Pension benefits are adjusted annually according to the financial position of the pension fund. In the new system, there is a clearer link between contributions and personal pension capital. Pensions are adjusted more flexibly and transparently according to market results.
Another key change is the move to a flat contribution rate for all ages, replacing the previous system where accruals were age-independent. This is seen as fairer across generations.
Social partners have a choice between two contracts: the ‘solidarity scheme and the ‘flexible scheme. Most participants will fall under the solidarity scheme which is characterized by collective investment strategy, a variable annuity pay-out and risk sharing through a collective buffer. The flexible scheme provides more flexibility for individual choice.
The pension sector is currently transitioning to the new pension schemes until 1 January 2028. Pension funds have the possibility to transfer old pension accruals to the new pension scheme, which will be done by most. This is a major operation for social partners and pension providers.
The second pillar in more detail
Three-quarters of the employees accruing a pension in the second pillar do so through an industry pension fund. The remainder accrue pension with a company pension fund or an insurer. There are 10 occupational pension funds for people in a certain profession. And more recently, several general pension funds were formed. They administer pensions for multiple employers at the same time, and can also take over the pension administration from other pension funds. Avrious schemes within the general pension fund are ring-fenced, meaning there is no solidarity between the schemes. In addition, there is an increasing percentage of people in work that are not accruing a second pillar pension because they are not covered by a collective bargaining agreement that provides an occupational pension. The number of pension funds has declined from 600 in 2010 to 130 currently. In the same period, total pension fund assets have more than doubled from €700 billion to €1,600 billion.
Through joint pension accrual, occupational pension assets in the Netherlands have grown to about €160,000 per household. The sector invests this money on behalf of its participants to enable a stable and inflation linked pension for them. This is done in a diversified way, to spread risk. Most funds focus on sustainable and responsible investment practices. After all, a good pension is only of use in a liveable world. Through pension funds, citizens get access to asset classes that are not easily attainable for individual investors, as well as investments across borders. Due to the long timeframe of their pension liabilities, pension funds invest for the long term.
We focus on innovation for, by, and with members
As an association, we bring various parties closer together. Together with our members, we work on building trust and clarifying our societal role.
The Dutch Federation of Pension Funds
Dutch pension fund are organizations with a social purpose that provide financial services. The sector is founded upon the basis of social dialogue and collaboration between employee and employer organizations, thereby committed to fulfilling the social responsibility of providing adequate pensions. Pension funds operate on the basis of capital funding: an employee and their employer pay contributions and that capital is collectively invested. Pension funds invest in the real economy not only for solid returns, but also to address societal challenges, such as the energy and digital transitions. Dutch pension funds are not-for-profit, ensuring that all collective profits contribute to an adequate pension for their members.
The Dutch Federation of Pension Funds promotes the pension interests of 6.2 million participants, 3.8 million pensioners and 9.1 deferred participants. About 85% of Dutch employees is a participant of a pension fund associated with the Dutch Federation of Pension Funds. Dutch pension funds have around 1,600 billion euros of assets under management.