Q+A AOW: Basic Old age pension What is the AOW? The General Old Age Pensions Act (AOW) is a basic pension for people aged 65 and over. In addition, the AOW grants a supplementary allowance to people entitled to an AOW pension whose respective partners are under the age of 65 and have only limited or no incomes. Insured by law Everyone living legally in the Netherlands is insured by law under the AOW between the ages of 15 and 65. No distinction is maintained between men and women or the employed and unemployed. You are insured even if you do not live in the Netherlands but work in the country and, as a result, are subject to its wage tax. What is the amount of the AOW contribution? The contribution for 2010 is 17.9 percent. Everyone who pays Dutch wage tax and/or income tax who is not yet 65 or older pays the AOW contribution. This contribution income is used immediately to pay out AOW benefits. The contribution is withheld from the wages of employed people or from the benefits of those on welfare. A self-employed person pays the contribution through an assessment imposed on his or her income by the tax authorities. When do you receive the AOW pension? You will start receiving an AOW pension on the first day of the month in which you turn 65. The AOW pension will be paid out at the end of each month. Entitlement to an AOW pension ends on the first day after the death of the entitled party. The amount you receive depends on your living situation and on the number of years that you were insured under the AOW. Applying for an AOW pension If you are registered with your municipal authorities in the Netherlands, a letter which explains how you can apply for an AOW pension from the Social Insurance Bank (SVB) will automatically be sent to your home address six months before your 65 th birthday. If you have not yet received an application form three months before your 65 th birthday, contact the SVB. What is the amount of your AOW pension? The AOW pension is based on the minimum wage and is not the same for everyone. The amount you receive depends on your living situation and the age of other household members. Different pension amounts apply to, respectively, a single person, a single parent and a married/cohabiting partner.
Gross monthly amounts as of 1 January 2011 AOW pension Holliday allowance Single person 1,034.38 58.62 Single parent with a child up to the age 1,312.27 of 18 75.35 Married or cohabiting (both partners 710.51 for each person entitled 41.87 aged 65 or over) to an AOW pension Married or cohabiting without a supplementary allowance (partner 710.51 41.87 younger than 65) Married or cohabiting with a full supplementary allowance (partner younger than 65). If your partner earns 1,421.02 a gross monthly amount greater than 83.74 1,259.40, you will no longer receive the allowance. If your AOW pension started before 1 February 1994 and your partner is not yet 65, the following amounts apply: Married or cohabiting (partner younger than 65) 1,034.38 58.62 Note: The amounts specified above are full AOW pension benefits. If you only became a resident of the Netherlands at a later stage or if you lived abroad for a number of years, your benefit amount will probably be lower. The amounts specified are gross monthly amounts. The SVB withholds tax and contributions from the pension, as well as the income-related contribution for health insurance. The holiday allowance is accrued each month and paid out in May. Compensation Besides the old age pension, every old age pensioner was until 1 june 2011 entitled to a compensation. Starting 1 june 2011 the Purchasing Power Allowance for Older Taxable Persons Bill (KOB) has taken effect. The AOW compensation is replaced by the KOB compensation. The amount of the KOB compensation is equal to the current AOW compensation ( 33,09 a month), but is paid only to older people who are taxable in the Netherlands for 90% or more of their global income. This means that many older people abroad will not be entitled to this new compensation. Cohabitation and the AOW Cohabitation is a broad term under the AOW. You are considered to be running a joint household if you are sharing a home with someone else (principal place of residence is the same home) and if you are both contributing to the costs of the household or are caring for
each other. Under the AOW, it does not matter why or with whom you are running a joint household. It can, however, affect your AOW benefit. The SVB explains what is considered a joint household in its brochure Samenwonen... of niet? ( Cohabiting or not? ). A change in the composition of your household can affect the amount of your benefit. You must therefore report changes in your living situation to the SVB immediately. Incomplete AOW pension You will not receive the full AOW pension amount if you started living in the Netherlands after the age of 15. You will also receive a lower AOW pension amount if you temporarily or permanently leave the Netherlands to live in another country or if you were already older than 15 when the AOW came into force. The amount of AOW pension to which you are entitled is reduced by 2 percent for every year that you did not live in the Netherlands between the ages of 15 and 65. Voluntarily insured If you leave the Netherlands to live in another country, you can arrange to be voluntarily insured under the AOW at the SVB. Note that this insurance must be arranged within a year after you are no longer insured by law under the AOW. To be eligible for voluntary insurance under the AOW, you must have been insured by law for at least a year. The maximum term of voluntary insurance is limited to ten years. This maximum does not apply, however, if you were already voluntarily insured on 31 December 2000 and remain voluntarily insured. Supplementing an incomplete AOW pension If you came to live in the Netherlands after 1 January 2001, it is possible to buy the years that you were not insured under the AOW. In this case, the years concerned are those between the one in which you were 15 and the one in which you came to live in the Netherlands. You must submit a request to the SVB to buy these years. This request must be submitted within five years of your arrival in the Netherlands. Personally taking measures You can also take personal measures, for example by saving money, investing or arranging a supplementary pension with a private insurer. If your income is less than the guaranteed minimum income The AOW provides for a minimum income for people over 65. If the amount of AOW pension you receive is reduced because you lived abroad for a number of years, your income may drop to below the guaranteed minimum income. If, in addition, you do not have any other source of income, such as a supplementary pension or an annuity, you can turn to the Work and Social Assistance Act. This Act provides for a supplement to your AOW pension and/or other pension up to the guaranteed minimum income. Further information on the matter can be obtained from your municipal authorities and the SVB. Older than 15 when the AOW was introduced The AOW came into effect on 1 January 1957. If you were already older than 15 on that date, you did not accrue AOW years between your 15 th birthday and 1 January 1957. The AOW
therefore includes transitional provisions that ensure that those years are nevertheless considered accrued years. To be eligible for these transitional provisions you must: have lived in the Netherlands, the Netherlands or Aruba, possibly having switched between them but nevertheless for an uninterrupted period of six years (the six-year requirement), after turning 59; be a Dutch national; currently reside in the Netherlands. If you leave the Netherlands to live or work abroad, you may lose eligibility to benefit from the transitional provisions. You can prevent this from happening by arranging voluntary, additional insurance (for a maximum period of ten years) at the SVB. Will your AOW pension be reduced if you are living with someone else in connection with care duties? If you are temporarily sharing a home as a single, elderly person with another single person receiving an AOW pension because one of you requires comprehensive care, your AOW pension will not be reduced. However, both of you must retain free access to and control of your respective homes; in other words, the cohabitation may not be permanent. The AOW pension of someone with a child under the age of 18 and whose current pension benefit amounts to 90 percent of the minimum wage who temporarily shares a home with someone else to care for them or to be cared for will also not be reduced. This scheme applies if care is being provided to someone who is no longer able to care for him or herself due to an illness or physical, cognitive or psychological disorder. The SVB, the implementer of the AOW, determines whether people fall under the scheme. When are you eligible for an AOW supplementary allowance for your partner? You are eligible for an AOW supplementary allowance if you are receiving an AOW pension and your partner is younger than 65. The allowance is only granted if the younger partner has only a limited or no income. In this connection, only income from work (a job) or income related to work (a social security benefit or early retirement pension) is considered. The supplementary allowance will stop as soon as your partner turns 65 and starts receiving his or her own AOW pension. Partner has lived or worked outside the Netherlands If your partner has lived or worked outside the Netherlands, he or she will usually not have been insured under the AOW. A supplementary allowance for a partner is reduced by 2 percent for every year that the partner was not insured under the AOW. Supplementary allowance for a partner will end in 2015 The supplementary allowance will be abolished in 2015. This will have consequences for you if you were born on or after 1 January 1950.
If you are the first partner to turn 65 on or after 1 January 2015, you will only receive your part of the AOW pension. Your income may temporarily be lower as a result. This will be the case if your partner does not have his or her own income. The period during which you will both receive less income depends on the age difference between you and your partner. If, for example, you are two years older, you will both receive only your AOW pension for two years. (Note: A new bill has taken effect, arranging for a reduction of the partner allowance of 10% for new and current rights of partners with a combined income of more than approx. 30.000 euro's as of 1 August 2011.) Measures You can prevent a temporary drop in income by taking measures now. A number of options are available in this regard: your partner could get a job; you could open a savings account; you could take out a single-premium policy or savings insurance, or start investing. In this case, make sure that you are properly advised by a financial expert. You do not have to take measures at the present time to compensate for the abolition of the AOW supplementary allowance in 2015 if: the youngest partner expects to have a sufficient income by that time; you expect that you will be able to make ends meet from 2015 without additional income. This could be the case if your spending pattern has changed substantially by that time, for example because the mortgage has almost been paid off or the children are living independently; the age difference between you and your partner is minimal and therefore the amount in question is relatively small. Are you insured under the AOW if you came to live in the Netherlands at a later stage? If you came to live in the Netherlands when you were already older than 15, you will not have accrued a number of AOW years. The amount of AOW pension to which you are entitled is reduced by 2 percent for every year not accrued. If you came to live in the Netherlands after 1 January 2001, it is possible to buy the years that you were not insured under the AOW. In this case, the years concerned are those between the one in which you were 15 and the one in which you came to live in the Netherlands. You must submit a request to the SVB to buy these years. This request must be submitted within five years of your arrival in the Netherlands. What about your AOW pension if you live or lived abroad for a number of years?
If you leave the Netherlands to live or work in another country, you will usually no longer be insured by law under the AOW. Exceptions You are posted to a position abroad by the Dutch government. You are temporarily posted to a position abroad by your employer based on a secondment statement. Ask the SVB whether AOW accrual will continue. Permanent work abroad If you work abroad on a permanent basis, you will no longer be insured under the AOW. The amount of AOW pension to which you are entitled is reduced by 2 percent for every year that you are not insured. You can prevent this from happening by arranging to be voluntarily insured under the AOW. Voluntarily insured You can arrange to be voluntarily insured under the AOW at the SVB. Note that this insurance must be arranged within a year after you are no longer insured by law under the AOW. To be eligible for voluntary insurance under the AOW, you must have been insured by law for at least a year. The maximum term of voluntary insurance is limited to ten years. This maximum does not apply, however, if you were already voluntarily insured on 31 December 2000 and remain voluntarily insured. You can also arrange a supplementary pension with a private insurer. Will you continue to receive an AOW pension if you live abroad? You may have plans to live abroad after you turn 65. In that case, you must take the Foreign Residence Benefit Restrictions Act (BEU) - information is in Dutch - into account. You can transfer your entire AOW pension to countries of the European Union (EU) and countries of the European Economic Area (EEA). EEA countries are EU countries plus Iceland, Norway and Lichtenstein. You can also transfer your entire AOW pension to the Netherlands Antilles, Aruba and treaty countries. If you move to a non-treaty country, you will only be eligible for an AOW pension for a spouse (without a supplementary allowance). You can find out whether an AOW pension can be transferred to a certain country on the SVB website. More information If you have any further questions concerning this information, please contact the Public Information Department of the Ministry of Social Affairs and Employment. Telephone: 0800 9051 (free).