“No one has any idea how to solve this”

Published on: 31 January 2024

The Netherlands is aging. And that affects all sorts of things, such as the housing market, the healthcare system, the economy, the labor market and the pension system. In a series of articles, we cover these topics through interviews with an expert and with people who are part of the gray wave. This time chief economist Thijs Knaap of APG on the influence of the gray wave on our economy and Peter Kentie (63), outgoing director of the Eindhoven city marketing organization Eindhoven365.


On January 1, 2023, the Netherlands had more than 3.6 million residents aged 65 and older (according to data of CBS). That is 20.2 percent of the population. The aging of the Netherlands has increased sharply: in 1990, “only” 12.8 percent were over 65. “How did that happen? It is a combination of three developments,” Knaap says. The first cause: the declining birth rate. “In 1973, the number of children per woman in the Netherlands was 2.1; the most recent figure is 1.49. That is a recipe for population shrinkage in the long run, and thus encourages aging.” The Netherlands, incidentally, is not unique in this, Knaap acknowledges. “In all countries where there is increasing prosperity and decreasing infant mortality, you see this happening.”


On the other hand, there is less mortality due to better medical care, among other things. Knaap: “Life expectancy at age 61 went from 17.7 years in 1950 to 23.5 years now. So someone who is 61 now will live to be 84.5 years on average. This is expected to exceed 30 years this century. Roughly speaking, life expectancy has increased by more than 30 percent since 1950." The third reason for the rising gray wave is the baby boom generation (1945-1955), which is now between 68 and 78 years old. “That is a relatively large generation, most of which is now retired,” said Knaap.


Shifting factors

An aging population is having an effect on the economy. “The ratio of employed versus retired is changing rapidly. In 1950 there were 7 working people for every retiree, now just under 3, and eventually there will be about 2,” Knaap knows. That, he says, is offset by rising immigration. “In 2040, how many people will be between 20 and 65? In 2014 we thought 9.3 million. Due to rising immigration the expectation is now 10.4 million.”


Another shifting factor is the retirement age. “The state pensionable age was always 65 (and lower in practice, ed.) but is now almost 67. I was born in 1972, so for me it will be 68. And for my 18-year-old daughter, it will be 70. That rising state pension age significantly improves the working-to-retiree ratio.”

Yet this cannot remedy the changing population composition. That has hefty consequences, Knaap argues. “This is because the elderly no longer work - in other words, do not produce anything - but consume. That means someone else has to produce for them. That is not surprising; I don’t produce my groceries myself either, but at the level of the whole economy it does have an impact. We have to get more from abroad.” And that's tricky, because consumption by the elderly consists mostly of services, and specifically: more demand for care. "More hands are needed, especially at the bedside. Maybe technology can help us tackle these problems.”

The ratio of employed versus retired is changing rapidly

Paying out more pensions

The changing demographics obviously have implications for the pension industry as well. “Just take the rising life expectancy, which is a point of concern. After all, if nothing else changes, we will soon have to pay out 30 percent more pensions. That is quite significant,” says Knaap.


In terms of affordability, he says it makes a big difference whether you finance those pensions through pay-as-you-go (the younger generation of working people currently pays for the older generation who receive the state pension) or through capital funding (employees themselves put in money for their pensions, and receive it after retirement). “In the Netherlands, we do both and we have a third pillar, as well” Knaap chimes in. “Besides the state pension that is financed through pay-as-you-go and the supplementary pensions, which are raised through capital funding, there are the private savings pots. The scope of the supplementary pension is very large, more than twice the gross domestic product (GDP). This makes us almost European champions; we are very good at saving. In Europe the average is less than 50 percent and in Germany, Italy and France even less, only 10 to 20 percent.” But does that much saving make us less vulnerable than other countries, which finance pensions primarily through pay-as-you-go, in tackling aging problems? Knaap: “It certainly helps. But the fact remains that our consumption also has to be produced somewhere. You can lean on foreign countries to some extent in this respect; the Netherlands has accrued a balance there in recent years through our current account surplus. Every year we save 7.5 percent of our national income, which we then invest abroad. So if APG buys American stocks and Asian bonds, we can eventually trade this back for products from those countries to consume here.”


You can’t import everything

But not everything can be imported, and seniors use many services (read care). Working people have to provide that anyway, Knaap thinks. “In short, the pressure on the labor market will increase regardless.”


Migration can help somewhat, and especially young people coming to the Netherlands can do their part. Knaap: “But it can also be the other way around; older people can move to areas where the weather is nice and care is cheap. But the reality is that migration matters very little on the whole. So we have to come up with something else. Right now, nobody really has any idea how we’re going to solve this. Policy makers have their work cut out for them in that regard in the future.”


(On pictures: Peter Kentie)

"There are no jobs; only great projects”


Peter Kentie will be retiring in June, after more than 30 years of employment. During that time, he accrued pension pots with several employers. How does he view retirement? “I’m not worried.”

Peter's last project as director of Eindhoven365 is coming to an end. His retirement is imminent in June 2024. Peter: “After twelve and a half years; a good time to stop. But, of course, I’m also curious to see what comes next.”


Before we look ahead, let’s take a look back. Around the turn of the millennium, Peter started working at internet company ilse media. “Before that, I worked at Philips. And then suddenly I went from a multinational company to a start-up with twelve people, a student-like club born out of Eindhoven University of Technology. That was really pioneering. I became responsible for the content and the brand. And nobody wanted to be technical director, so I became one. Even though I didn’t know enough about that,”


Peter laughs. “Eventually, ilse media was sold to VNU and later to Sanoma. By then I was done with it. And then PSV came along. They were at a loss there. They knew what to do with lucrative TV rights, but they didn’t know a thing about internet and mobile. One thing led to another and I ended up working there for ten years.”


6 pension pots, 5 break-ups

“Moving from company to company – and with that, from project to project – like a butterfly is what I like, Peter tells us. But flitting between companies also meant wandering from one pension fund to another.


Peter: “Pension break was something I did become aware of at the time. It turned out that a previous employer had stopped paying pension contributions in recent years. That worried me. And all those separate pensions, do you have to tie them together? Eventually I invested in an annuity policy. And I learned through ten years at PSV that at least you build up something after a long time. In my working years, I ended up with six pension pots and five breaks. I would highly recommend support from an expert to anyone. Thanks to the advice of an expert, my wife and I have a clear overview and secure financial future, despite my premature retirement at age 64.”


Never back to the office

Peter shared the decision that he will officially retire in June 2024 with his team with a gut-wrenching feeling.


“That was really hard. After all, they’ve kind of become your family. And this job at Eindhoven365 is my longest project ever. With twelve and a half years of pension accrual with ABP. That's great! But there are some things I’m looking forward to. I hear from other pensioners that the first period is pretty tough. That goes through my head, but I’ll just wait and see. Every since I’ve been working, I’ve been living for the weekends. Are all my days going to be the same now? June is a good time to stop in that respect. Then you are instinctively just going on vacation. Only, afterwards you don’t return to the office. The pressure of a day-to-day working life will be gone and I’ll finally have more time to spend with my wife, who has been retired for a while. She has missed me in recent years.”


No worries

Along with Peter, many more people will be retiring in the coming years. The aging population is steadily increasing and, as a result, the ratio of employed to retired is changing rapidly. Does Peter worry about that? “For health care support, this ratio seems to me to be worrisome in the long term.”


And what about finances? “I’m not worried. My annuities are being released, as is the life insurance linked to our mortgage. And our house is paid off. So that will be fine.”


  • Name: Peter Kentie
  • Age: 63
  • City: Eindhoven
  • Relationship status: married, no kids
  • Retirement date: June 1, 2024
  • Employers: Kentie Design, Kothuis, Codim, Philips Design, ilse media, PSV, Eindhoven365