Netherlands no longer have world’s best pension system

MAIN | By Correspondent Oct. 19, 2021

AMSTERDAM – The Dutch pension system is performing even better than last year, but still, the Netherlands lost the title of the best pension system in the world to Iceland, RTL Nieuws reports based on an overview by Mercer.

The Netherlands and Denmark have been neck-in-neck for the top of the Mercer ranking for almost a decade. Last year the Netherlands was in first place and Denmark in second. This year both countries took a step down to make room for newcomer Iceland at the top. The first year that Mercer included Iceland in the ranking, the country “comes in at number one by far,” Mercer pension expert Marc Heemskerk said to RTL.

The Icelandic pension system scores better than the Netherlands’ because Iceland has more over-55-year-olds that are still working, Heemskerk explained. “If you work, you can build up more pension for yourself and contribute to the state pension, which we call AOW. If you don’t work, you don’t pay AOW premiums either.” Household debt in Iceland is also somewhat lower than in the Netherlands. As a result, Icelandic pensioners have less debt to pay off and can spend more money on other things. Iceland also has a more favorable population structure, with more residents to pay AOW contributions soon, Heemskerk said.

“Our pension system continues to score well compared to other countries,” Heemskerk added. “We are one of only three countries in the world to score an A.” Because share prices have been rising for some time and the market interest rates are also picking up, the threat of pension cuts has passed most of the major funds, he said. “There are even pension funds that are going to increase pensions, so I see some cautious sunshine.”