Glossary: Dutch retirement terms in plain English

What the Dutch retirement terms mean

Dutch retirement terms describe three kinds of pension and three kinds of income tax. The AOW (state pension) is the first pillar, a pension through work the second, and a lijfrente the third. In 2026, a full AOW for someone living alone is €21,203 a year before tax, and Box 3 taxes savings above €59,357 a person.

Each term keeps its Dutch name, because that's the word on your letters from the SVB, your pension fund and the Belastingdienst. The terms are grouped by subject, and each links to the guide that explains it in full.

The state pension: AOW and Anw

AOW (Algemene Ouderdomswet) is the Dutch state pension, paid by the SVB from your AOW age. You build up 2% of a full AOW for each year you live or work in the Netherlands, over the 50 years before your AOW age. It's paid per person, and it's lower each if you live with a partner. See AOW.

AOW age is the age your AOW starts. It's 67 for most people retiring in the next few years, and it's set five years ahead from life expectancy.

Anw (Algemene nabestaandenwet) is a benefit from the SVB for a partner left behind after a death. It's only paid before your AOW age, and only if you care for a child under 18 or can't work for at least 45%. See Retiring as a couple.

Mijn SVB is the site of the SVB, the agency that pays the AOW. You log in with DigiD and see the AOW you've built up so far.

Pensions through work

Pension through work (pillar 2) is the pension your employer arranges, usually through a pension fund. You and your employer pay premiums from your salary, and the fund pays you a pension once you retire. In English it's often called an employer pension. See Employer pension.

Franchise is the first part of your salary that builds no pension through work, because the AOW is assumed to cover it. Each pension fund sets its own. For the Jaarruimte, the franchise is €19,172 in 2026.

UPO (Uniform Pensioenoverzicht) is your yearly pension statement from each pension fund. It shows the pension you've built up, what you could get by your AOW age, and your factor A.

Factor A is how much your yearly pension through work grew in a year, as your UPO shows it. It lowers your Jaarruimte, because that pension already has tax relief.

mijnpensioenoverzicht.nl lists every pension through work you've built up in the Netherlands, with your AOW, in one place. You log in with DigiD.

Wtp (Wet toekomst pensioenen) is the new pension law. Pension funds are moving everyone's pension into a personal share of the fund's money, and they have until 1 January 2028 to do it.

RVU (regeling vervroegde uittreding) is an early-retirement scheme. An employer can pay you a monthly amount for up to three years before your AOW age, up to a set amount, without the extra tax that would otherwise apply. Many sectors agree one in their collective agreement (CAO).

Your own pension savings: lijfrente

Lijfrente (pillar 3) is your own pension savings, with income tax back now. What you put in is deducted from your income, the money is locked until the payouts start, and the payouts are taxed as income later. See Lijfrente.

Banksparen is a lijfrente held as a blocked savings account at a bank. Pensioenbeleggen is a lijfrente held as a blocked investment account, usually in funds. Both follow the same tax rules; only what the money is in differs.

Jaarruimte is how much you can put into a lijfrente this year and deduct from your income. It's 30% of your income from work the year before, above the franchise, minus the pension you built up through work. For 2026 it's at most €35,589. See Jaarruimte.

Reserveringsruimte is Jaarruimte you didn't use in the last ten years, which you can still catch up. In 2026 you can use up to €42,753 of it in a year.

Revisierente is an extra 20% charge on a lijfrente you cash in before its payouts start, on top of the income tax. A small lijfrente, worth €5,513 or less in 2026, can be cashed in without it.

Income tax: the three boxes

Box 1 is the tax on income from work and your home, such as your salary, pension, AOW and lijfrente payouts. In 2026 it's 35.75% up to €38,883, and 49.5% on income above €78,426. See Dutch income tax.

Box 2 is the tax on income from a large stake in a company: 5% or more of its shares. Most people never pay it.

Box 3 is the tax on savings and investments. It's worked out from an assumed return on what you hold on 1 January, taxed at 36% in 2026. See Box 3.

Heffingsvrij vermogen is the tax-free amount in Box 3: €59,357 a person in 2026, or €118,714 for fiscal partners together.

Fiscal partner is the person you file your tax return with: your husband, wife or registered partner, or someone you live with who meets certain conditions. Fiscal partners can divide their Box 3 savings and some income between them.

Ouderenkorting is a tax credit for people over their AOW age: up to €2,067 in 2026, less as your income rises above €46,002. See Tax after AOW age.

Your home: WOZ and the mortgage deduction

WOZ value (waardering onroerende zaken) is what your municipality (gemeente) says your home is worth, sent to you each year. Several taxes are worked out from it.

Eigenwoningforfait is an amount added to your Box 1 income for owning your home: 0.35% of its WOZ value in 2026, for most homes.

Hypotheekrenteaftrek is the deduction for the interest on your mortgage. It lowers your Box 1 income at up to 37.56% in 2026, for at most 30 years. See Hypotheekrenteaftrek.

How the terms fit together

Your AOW, your pension through work and your lijfrente pay most of a Dutch retirement as income, taxed in Box 1. Your savings and investments pay for the rest, and Box 3 taxes them each year until you spend them. For the whole picture, read How pensions work in the Netherlands.