Social insurance schemes through the years

The Dutch social security system as we know it today is the result of a continuous development that goes back a long way. It has now become an inseparable part of the Dutch society. Because times and ideas change, the SVB and its predecessors have implemented a wide range of schemes and regulations through the years. Some still exist, while others have been stopped partly or altogether or adjusted.

The National Old-Age Pensions Act (AOW) came into force in 1957. The new Act entitled every Dutch citizen to a basic old age pension. The Prime Minister at the time was Mr Willem Drees, and the responsible minister for social affairs was Mr J.G. Suurhoff. On 2 January 1957, Mr Bakker of Boterdiepstraat in Amsterdam was presented with the very first AOW pension payment by Minister Suurhoff. In that first year, another 738,692 people would follow. From the start, this was the largest scheme that the organisations responsible - the Sociale Verzekeringsbank and the Labour Councils - were tasked with managing.

Basic pension

The AOW pension was meant as a basic provision, supplementing other income. In 1957, a single person received €32.45 per month, and a married couple received €54.00. After the Act had been in force for five years, it was recognised that senior citizens who relied fully on this basic provision could not make ends meet, and the AOW pension was increased by 15%. In 1965, the AOW pension was raised to the social minimum level (amount of income needed for an acceptable standard of living). At the time, this was €99.38 per month for a single person and €142.02 for a married couple.

Independent entitlements

Initially, only men and unmarried women were eligible for an AOW pension. If a married woman turned 65 before her husband, AOW pension would not be paid until her husband turned 65. On 1 April 1985, however, women also became entitled to an AOW pension in their own right and a supplementary allowance was introduced for pensioners with a partner under 65. The ratio between the AOW pension and the supplementary allowance was revised a couple of times over the years.

in 1988, the supplementary allowance was made dependent on the income of whoever was the younger partner. A reform of the Dutch social security system in 1987 removed the distinction between married and unmarried couples. In addition, a separate pension rate was introduced for single pensioners with a child under 18.

The AOW scheme is a compulsory insurance scheme which is funded on a pay-as-you-go basis. This means that AOW pensions are financed from the contributions paid by the working population under the pension age. AOW pension contributions are charged on income a person receives during the 50-year period preceding their AOW pension age. Since 1972, people whose insurance under the AOW scheme has stopped, for example because they have left the Netherlands, have had the option of taking out voluntary insurance.

1 January 2013 saw the introduction of the first major change for many years: an increase in the AOW pension age. The AOW pension age has since been raised in stages. 

The supplementary allowance scheme was discontinued in 2015.

It was not until 1 October 1959, at the instigation of Minister Suurhof, that a benefit scheme was introduced for widows and orphans: the National Widows’ and Orphans’ Pensions Act. This Act presented the Sociale Verzekeringsbank (SVB) and the Labour Councils (Raden van Arbeid) with a new task.

The AWW scheme was designed as a risk insurance scheme: the benefit amount was not related to the length of insurance. The scheme provided for 3 types of benefit: widow’s pension, temporary widow's benefit and orphan's pension. The temporary widow’s benefit was a transitional benefit for widows who did not meet the conditions for a widow's pension. Children were only entitled to an orphan’s pension if both parents had died. Until 1988, widow’s benefit and pension were only payable to women. As from 1988, widowers also gained the right to claim a pension or benefit, on the basis of a court ruling.

As from 1972, people whose insurance under the AWW scheme had stopped, for example because they had left the Netherlands, had the option of taking out voluntary insurance.

In 1996, the National Survivor Benefits Act (Anw) replaced the National Widows’ and Orphans’ Pensions Act (AWW).

In 1996, the National Survivor Benefits Act (Anw) replaced the National Widows’ and Orphans’ Pensions Act (AWW).

The introduction of the Invalidity Act (IW) in 1913 represented a major step forwards in social security. The Act covered the financial risks of invalidity (when a person was unable to work), no matter the cause. 

It was an employee insurance scheme, covering employed persons only. If a salaried employee turned 70, this was considered equivalent to invalidity. A single person would get an old- age benefit of €0.91 per week; a married person would get €1.36 per week. Employees did not have to pay any contributions; the benefit was paid by the state. In the beginning of the 20th century, however, not many people lived to 70. In 1919, the Invalidity Act was widened to include widows and orphans.

Collecting stamps

It was Minister A.S. Talma who managed to steer the Invalidity Act through Parliament. The Rijksverzekeringsbank (National Insurance Bank) was entrusted with the task of implementing the Act. After 1919, the Act was widened and improved. The age for entitlement to an old-age benefit was lowered to 65. Insurance became compulsory and insurance cards were introduced on which employers had to place stamps every week. 50 years’ worth of stamps would entitle the employee to an old- age benefit of €2.72 per week. Slowly but steadily, the number of people who were entitled to claim an old- age benefit under a social insurance scheme increased.

A few child benefit schemes were introduced as far back as the beginning of the 20th century, including schemes for postal workers and civil servants working for the national government or for regional or local authorities. This was also the start of a long-lasting debate about the desirability of a nation-wide child benefit scheme. In 1920, the Dutch parliament agreed to a national child benefit scheme. Due to the economic recession, however, it was not until many years later that a bill was finally proposed. In 1941, the first child benefit act took effect. The act only covered salaried employees. Child benefit was only paid for the third and each subsequent child because it was assumed that the salary was sufficient to support a family with 2 children.

Working for an employer or self-employed

After the war, politicians agreed that child benefit should not only be available to paid employees, but to the entire population. In 1963, the National Child Benefits Act (AKW) came into force. Under the Act, everyone was entitled to child benefit for their third and subsequent children. In addition, the Child Benefits Act for Salaried Employees (KWL) also entitled employees to child benefit for their first and second child. At the same time, self-employed persons with a low income could claim child benefit for their first and second child under the new Child Benefits Act for Small Independents (KKZ). The Sociale Verzekeringsbank and Labour Councils (Raden van Arbeid) were responsible for the implementation of these Acts. In 1980, the different Acts were combined to form a new National Child Benefits Act (AKW)

In the period following the Second World War, many elderly persons still relied on the Poor Act. During the occupation, the wartime government-in-exile in London had already established a commission to find a solution for the huge problem of social security in the Netherlands. It was to take years before a major reform could be carried out. Willem Drees, who took office as Minister for Social Affairs in 1945, felt that the elderly could not wait that long and that something had to be done in the short term. In 1947, in anticipation of permanent legislation (the future AOW pension scheme), the Emergency Old-Age Pensions Act was put into force. It was a state benefit, not based on insurance, and no contributions were charged. Every Dutch citizen (men and unmarried women) aged 65 or over was entitled to a benefit.

To be ‘on Drees’

All Dutch municipalities were classed according to a 5-point scale, with a maximum income for each class. A married person in a first-class municipality would not be entitled to a benefit if he earned more than €623.95 per year. In 1947, the benefit for a married person in a first-class municipality was €424.74 per year; for a single person, it was €239.60. Other income would be deducted from the benefit. The Emergency Old‑Age Pensions Act was implemented by the Labour Councils (Raden van Arbeid) and the National Insurance Bank (Rijksverzekeringsbank). It was only intended for a period of 3 years, but was extended several times, remaining in force until 1957. The Act was commonly known as the ‘Drees Emergency Act’ and gave rise to the saying ‘to be on Drees’.

The Accident Insurance Act 1901 (OW) was the first social insurance act to be introduced in the Netherlands. The Rijksverzekeringsbank (National Insurance Bank) was entrusted with its implementation. Initially, the Act only applied in high-risk industries and only covered salaried employees working in these industries against the financial consequences of industrial accidents. The benefit was set at 70% of the wages, up to a maximum of approximately €1.27 per day, and continued after the beneficiary had turned 65. The Act could be seen as the first tentative, frugal attempt at creating an old age pension system. The widow of a person who had died as a result of an industrial accident and who had been insured under the Accident Insurance Act was entitled to a benefit of 30% of her late husband's wages. The Act also provided for orphans' benefits.

Major changes

When the Accident Insurance Act was created, the Minister in charge was Mr C. Lely (known in particular for his engineering work in the draining of the Zuiderzee). He was a politician of the Liberal Union, a progressive movement advocating the introduction of social insurance schemes, and Minister of Water Management, Trade and Industry. In those days, there was no separate Ministry of Social Affairs. 

The Accident Insurance Act of 1901 underwent so many amendments in 1921 that is has since been known as the Accident Insurance Act 1921. As from that date, the Act covered all businesses except those in agriculture and horticulture, shipping and sea-fishing, which had their own regulations for industrial accidents. Workers were insured against the financial consequences of accidents at work. Convalescence and retraining became possible, and the term ‘accident’ covered a larger number of industrial illnesses.

The Old-Age Pensions Act 1919, also known as the Voluntary Old-Age Pension Insurance (VOV), was introduced under Minister Aalberse. It made old-age pension insurance available to non-wage earners with a low income. It was a voluntary scheme, with a state guarantee. The VOV scheme was implemented by the Labour Councils (Raden van Arbeid) and the National Insurance Bank (Rijksverzekeringsbank) 

and its alleged blessings and benefits were advertised in every way possible. In reality, however, the pension, which was paid to persons aged 65 or over, was far from generous. It started at €2.27 per week for unmarried persons and €2.72 per week for married persons, although this amount was later increased. In 1923, the VOV scheme was extended to all citizens, and the maximum pension was raised to €9.08 per week. People who could not afford this voluntary insurance, mainly blue collar workers, had to make do with whatever they received on the basis of their stamp cards and, if they were lucky, a small company pension. In the 1970s, politicians decided that the VOV scheme had had its day, but it took until 1990 before all entitlements under the scheme had been properly settled.

As early as 1910, a draft Sickness Benefits Act was submitted to Parliament by Minister Talma. Although the bill was passed in 1913, it was not until 1930, after Parliament had accepted an amended draft submitted by Minister Slotemaker de Bruïne, that the Act came into force. The reason for the delay was that the political parties had had difficulty agreeing on who should implement the new scheme, and whether it should include medical care. In the end, the Labour Councils (Raden van Arbeid) and special sickness funds were given the task of implementing the Sickness Benefits Act. 

Under the Act, employees with an agreed fixed wage of up to €1,361.34 per year were entitled to a benefit for loss of wages due to sickness. After the wage limit had been increased a couple of times, it was abandoned altogether in 1969, when the Incapacity Insurance Act (WAO) was introduced. In 1947, the maximum benefit duration was set at 52 weeks. Medical care would be regulated under the Sickness Benefits Act (ZW) at a later date.