The Dutch pension system has once again been declared the best in the world. Even under the new pension rules, the Netherlands will continue to be among the top performers. For the 16th consecutive year, consultancy firm Mercer has released a ranking of the world's best pension systems. As in previous years, the pension systems of Iceland, Denmark, and Israel also score well.
Marc Heemskerk, a pension expert at Mercer, describes our solidarity-based pension system as a truly Dutch phenomenon. “Internationally, there is nowhere else with a solidarity arrangement like ours. This solidarity will also remain central under the new rules. In this respect, the current and updated pension systems are quite similar.”
Pension for Life
In the Netherlands, retirees receive a pension for as long as they live. According to Heemskerk, this is far from the norm everywhere. He mentions Australia as an example, where he recently had to explain how our system works.
Mercer's research, conducted in collaboration with the investor organization CFA Institute, also shows that retirees in our country receive a high amount of pension on average. The Netherlands ranks highest among all 48 countries in the report when it comes to maintaining the standard of living after retirement. “The replacement rate, which indicates how much pension you receive compared to the income you had just before retirement, is 93 percent here. That’s enormous. It's important to reflect on how well we have it here.”
Even Iceland – number two on Mercer’s ranking – scores significantly lower in this regard. “But Iceland’s pension system has the advantage of broad coverage. They include freelancers in their system. So, in that area, Iceland outperforms the Netherlands.”
Solid Foundation
According to the report, there is no single solution to strengthen pension systems, especially given the aging population. “It’s up to governments, policymakers, the pension industry, and employers to work together. They must ensure that older people can maintain a lifestyle comparable to their working years.”
High Premiums Ensure System Sustainability
The Dutch pension system is also, as is well known, undergoing significant changes. Between January 1, 2025, and January 1, 2028, we will transition to the new rules. According to Heemskerk, the Netherlands will continue to perform well after that. “We have high pensions in the Netherlands due to the combination of state pension (AOW) and additional pension schemes. The contribution that employees and their employers pay is high. This will not be compromised under the new rules, so the adequacy will remain strong.”
The fact that in the Netherlands, we effectively dedicate one out of every five working days to our pension ensures that we have a robust system. This is quite different in other countries, according to the pension expert.
Not About the Ranking but the Learning Process
Heemskerk emphasizes that the ranking is not meant to award a prize. “The goal is for us to learn from each other. It’s good to understand how things work in other countries.”