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Elderly Poverty in the Netherlands
The Netherlands is a country in northwestern Europe, neighboring Belgium to the south, Germany to the east and the North Sea to the north and west. A founding member of NATO, the E.U. and the OECD, the Netherlands has the world’s 18th largest economy and the sixth-largest in the European Union. With a life expectancy of 81.95 years and a relatively low birth rate, Dutch society is aging. Nevertheless, the Dutch seem to be doing so gracefully, as the rates of elderly poverty in the Netherlands are the lowest in the OECD. Here is the current situation regarding elderly poverty in the Netherlands and what the country is doing about it.

 

The Current Situation

Like most other European countries, the population of the Netherlands is aging. As of 2020, approximately 19% of the population is aged 65 and older, lower than the European average of 20.5% but higher than the U.S. figure of 17%. In 2016, the rate of elderly poverty in the Netherlands was only 3.1%. Elderly poverty in the Netherlands is the lowest within the OECD and much lower than the U.S. rate of 23%, the highest rate of elderly poverty within the OECD.

The good news for those in their golden years in The Netherlands does not stop there. Households that people aged 65 and older head in the Netherlands saw their capital increase from an average of 22,000 Euros annually in 1995 to 86,500 Euros in 2015. The income of this age group is five times higher than that of an average Dutch household. During the late 1990s, only about one in three elderly Dutch persons were homeowners, but by 2015 more than half owned their own homes. The risk of those aged 65 and over falling into poverty has also decreased over the past 20 years.

The Dutch Pension System

The Dutch pension system rests on three pillars: a flat-rate state pension, supplemental occupational pensions and voluntary private pension provisions. The first pillar, a flat-rate state pension, receives financing through payroll taxes paid to residents 67 years of age and older. Supplemental occupational pensions, the second pillar of the system, consist of additional occupational pensions accrued during employment. The third pillar is the voluntary private pension system, through either endowment insurance or annuity insurance. Together, these three assistance sources have provided a stable income source for older adults in the Netherlands.

The Melbourne Mercer Global Pension Index has classified the Dutch pension system as a B+ system, one of the best in the world. Only Australia has an equal rating for its pension system, and only Denmark’s pension system ranks higher with an A rating. The U.S. pension system, by comparison, obtained the rating of being a C system. A B+ pension system is defined as having a sound structure but with some room for improvement, while a C system has some positive features but significant shortcomings.

Extensive Home Ownership

According to Statistics Netherlands, increased capital among the elderly, which decreases the chances of slipping into poverty, lies in extensive homeownership. More than half of elderly homeowners own a home with a market value above the original purchase price.

Universal Health Care

Dutch law requires all residents to have a private health insurance policy, and insurers must accept every applicant. Furthermore, a national insurance system for long-term care such as nursing homes and exceptional medical expenses exists in the Netherlands. This insurance is mandatory and paid for through public insurance contributions. There seems to be a clear relationship between elderly poverty and health care spending. Among OECD countries, the Netherlands has the second-highest health care spending and the lowest rate of elderly poverty.

The picture has not been so rosy for the entire elderly population of the Netherlands. Elderly poverty in the Netherlands among those of non-Western background, who made up 6% of the total elderly population in 2020, is higher than that of the native Dutch. Income levels and life expectancy are lower among these groups than they are among native Dutch elders. This is an issue of concern, which reflects the disparity within larger Dutch society between natives and those of non-Western migrant backgrounds.

Tens of thousands of older people in the Netherlands do indeed live in poverty. Still, the low rate of poverty and significant financial success of the vast majority of older people in the Netherlands suggests that the system is working well for most.

Adam Abdelaziz
Photo: PIXY