WORKSHOP 2B Basic State Pension AOW Institutional tool Maria van Boxtel, Land & Co

AOW (Algemene Ouderdoms Wet) What is it ? Basic state pension for everyone in the Netherlands OBLIGATORY PARTICIPATION FOR ALL 2% build up for every year of your life you LIVE in NL Target group: old people By whom? Dutch state: national level Part of ‘peoples insurance’ (volksverzekeringen) for kids, old age, widowers/s, care

Why ? To prevent old age poverty Willem Drees, prime minister Emergency legislation 24 may 1948 and real legislation 1957 upping qualifying age 65 to 67 and more

You pay a premium if you work: How does it work? You pay a premium if you work: 1. Your employer deducts from your salary 2. The state deducts from your welfare payment 3. An entrepeneur pays a % of turnover in income tax To a maximum of 18% of a turnover of 33.000 Euro: 1.000 – 5.000 max You get a pension if you are over 65 (or 67): Single household gets 760 euro (915 is minimum income) 2 person household gets 1115 euro (1300 is minimum income) So you get a minimum income at old age

Employee and Entrepeneur: Added pension Employee: 1. Your employer is part of a pension fund and deducts from your salary Employee and Entrepeneur: 2. Selling your ‘capital’ at retirement age (farmers!) 3. A banksaving: savings product for pension 4. A life annuity: insurance product for pension Cost reduction, like paying off your house etc.

The AOW is: Very succesfull, ‘best pension system in the world’ Relatively expensive 32,7 billion EURO for 3,2 million old people on 16,8 million citizens Gives pension to everyone, even the ones that do not work in an official job (housewifes, sick people etc) Not to sell your (farm) business at maximum price….