Pensions are obviously a highly charged issue these days. With the European population getting older and older, some might be worried what their retirement has in store for them, while others simply do not dare even to take a glimpse at the utterly confusing pension system.
Talented and ambitious Erasmus University staff and students are lively now, but do not often think about securing their financial future. Fieke van der Lecq, professor of pension markets in the School of Economics, answers a few questions and highlights the main points and issues that international students and staff should keep in mind, no matter if they plan to stay in the Netherlands or travel and work elsewhere.
Q. When should students start thinking about their pension?
A. “You should surely start thinking of pensions when you enter into a labour contract. In other words, when you start working even part-time, you should keep an eye on your monthly contributions and your annual pension statement. While they might seem really small, but over time they grow substantially”.
Q. What is state pension?
A. “State pension is usually paid out to citizens or inhabitants of the country. In the Netherlands, the Dutch are entitled to state pension regardless of paying taxes or not. Internationals could potentially be entitled to their home country’s state pension as well”.
Q. How long do you have to work in the Netherlands to be entitled to state pensions?
A. “You have to live in the country between ages 15-65, so for fifty years you gain 2 percent of your pension annually, which will equal the total sum of your state pension. If you live abroad, you will automatically accumulate 2 percent less per annum”.
Q. What is the occupational pension?
A. “When it comes to the occupational pension, these are collective pension plans for particular employers or industries. These are private funds or insurers in the Netherlands, but of course they are under governmental supervision”.
Q. And how much can you receive from the occupational pension?
A. “Occupational pensions will grow larger or smaller depending on how long you have worked for the employer”.
Q. Can one choose their pension fund for the occupational pension?
A. “No. For example, all civil servants and educational staff, including the employees of Erasmus University, build up their occupational pensions in the ABP foundation, one of the largest pension plans in the world”.
Q. If a person moves around a lot, what happens to their pension?
A. “The pension funds will wait patiently until the person retires, and then s/he can collect the monies from each pension fund individually. For state pensions, it will all depend on the eligibility rules of the countries that the person has worked in”.
Q. Are there plans to harmonize the pension systems within the European Economic Area?
A. “Yes. There are lots of debates about it, but the issue is still pending. Our international staff and students are very much ahead of the curve because they feel like world citizens, but the pension system is not ready yet for such avid country-hoppers. This has to do with labour and social security laws of every country, and synchronizing those is really difficult”.
Q. Can one claim their pension contributions immediately if they want to move elsewhere?
A. If you had a small job in the Netherlands, have accumulated approximately 400 euros or less in pension money and wish to move, you may be offered by the occupational fund to receive the money right away. Even though it sounds nice, you of course might miss out on the opportunity to let it grow”. MD
There is also a nice video to visualize the pension system within the EU.