21.1 Overview of the Welfare System and Main Migration Features in the Netherlands

This chapter aims to provide an overview of the access to the Dutch social security by individuals in situations of international mobility, especially European Union (EU) citizens and third-country nationals residing in the Netherlands, as well as Dutch nationals residing abroad.

Since the very first Dutch statutory social security laws were drafted, the Dutch Government has studied foreign social security systems. The first schemes for employees, unemployment, disability and sickness were Bismarck-type social security schemes. For instance, eligibility for benefits was limited to workers and benefits were earnings-related and financed from contributions. During the Second World War, the Dutch Government, in exile in London, came to hear about the Beveridge Report,Footnote 1 which was written and published in this period, and established a Commission to write a white paper on the future of Dutch social security.Footnote 2 The report by the Dutch Commission was the basis of a series of national insurance schemes, i.e. schemes which cover all residents and offer flat-rate benefits. Such schemes covered the areas of old-age pensions (1957), survivors’ benefits (1959), disability benefits (1967) and exceptional medical costs (1967).

Unlike the British government, the Dutch government did not choose to implement just one system of social security. Instead, national insurance schemes were added to the employees’ insurance schemes. Both types of social security insurance are still part of the present system. In addition to these insurance schemes, social provision schemes, such as the system of social assistance, were implemented. These schemes fill the gaps in protection which are not covered by the social insurance schemes.

21.1.1 Main Characteristics of the National Social Protection System

The Dutch social security system consists of a number of social insurance schemes (outlined in Table 21.1), social provisions for specific groups, and a general regulation for assistance (Klosse and Vonk 2014; Pennings 2017).

Table 21.1 Insured risk
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The Participatiewet (Participation Act) completes the social security system. It provides benefits to any national or foreign citizen legally residing in the Netherlands who does not have sufficient means or is in danger of not having sufficient means to provide for the necessary cost of living. This Act provides that a person must first claim any other insurance benefits or special social provisions available before he/she is entitled to the benefit under this Act. The old age, survivors and child benefit insurance Acts are national insurance schemes that generally cover all residents. Insured persons are obliged to pay contributions for the old age and survivors insurance schemes. These contributions are calculated as a percentage of the annual wage or income and are levied by the Tax Office together with the income tax.

Child benefits are financed from public funds (taxes). The Sociale Verzekeringsbank (SVB – Social Insurance Bank) is an organisation set up to manage the funds, carry out the administration of these Acts and pay the benefits. Chapter 6 of the Wet structuur uitvoeringsorganisatie werk en inkomen (Wet Suwi – Work and Income Implementation Structure Act) gives rules on the constitution, tasks and competences of the SVB. Article 34 of the Wet Suwi provides that the SVB is charged with the administration of the old age benefits scheme, the survivors benefits scheme and the child benefit scheme. The Uitvoeringsinstituut werknemersverzekeringen (Uwv – Administration of employees insurance schemes) administers the ZW, the WAO, the WIA and the WW, and the TW (Supplements Act). The Zorgverzekeringswet (Zvw) is a national scheme that insures all residents for health care provisions, regardless of their income (Pennings 2017).

Social insurance schemes (national insurance schemes and employees insurance schemes) are mainly financed from contributions from insured persons and, in case of insurance schemes for employed persons, also the employers. In some cases, the government supplements the fund, in particular for old age benefits. The Participatiewet is paid by municipalities. Since 1989, the national insurance scheme Algemene Kinderbijslagwet (AKW – General Child Benefit Insurance Act) is no longer paid from taxes. In certain cases –for instance, for the AOW and the ANW (General Survivors Pension Act)-, (formerly) insured persons can also take out voluntary insurance for the periods between the ages of 15 and pension age if they were not compulsorily insured during that time. This is especially important for people who temporarily live outside the Netherlands and are not sufficiently insured abroad. Voluntary insurance is possible for individuals below the age of 65 who are compulsorily insured for at least one year for a maximum period of ten years. Voluntary insurance is possible if the person concerned notifies the SVB within one year since the ending of the compulsory insurance.

21.1.2 Migration History and Key Policy Developments

The Netherlands has a long history of immigration and emigration. After the Second World War, emigration gained importance especially due to the difficulties of finding a job in a context in which the whole economy had to be built up again. During the 1950s, roughly 350,000 people emigrated, with Canada, Australia, and the U.S being the most popular destinations (Jennissen 2011). This trend started to change during the 1960, as immigration started to exceed emigration. In particular, persons from the (former) Dutch colonies started to come to the Netherlands (Indonesia, Surinam), this adding to the inflows of people recruited to come to work in the Netherlands in order to respond to labour shortages (guest workers) (Jennissen 2011). In this context, the Netherlands signed agreements for work recruitment with Italy (1960), Spain (1961), Portugal (1963), Turkey (1964), Greece (1967), Morocco (1969), Yugoslavia (1970) and Tunisia (1971). Turkey, Morocco and Spain were the most important recruitment countries. Just like in other European countries, many guest workers- especially from Turkey and Morocco- actually decided to settle in the Netherlands. In 1975, the policy of recruitment of foreign labour force stopped, although immigration continued as a result of family reunification. This led to a significant increase of the immigrant population. By way of example, from 1975 to 2014, the Turkish origin population grew from about 55,639 to 396,414 individuals, whereas the Moroccan origin population increased from 30,481 individuals in 1975 to 374,996 in 2014 (Jennissen 2011).

Until 2007, family migration was the main source of migration to the Netherlands, accounting for almost 40% of all immigrants. Since 2007, labour migrants make up the largest group, mainly from Central and Eastern European countries that joined the European Union in 2004 and 2007. As shown in Table 21.2, in 2018, there were little more than 3.8 million persons with a migration background residing in Netherlands, most of which with a non-Western background (WRR 2018).

Table 21.2 Population in the Netherlands, 2018
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As a general rule, immigrants can naturalize in the Netherlands after five years of legal residence, or three if they are married to a Dutch citizen (for more information regarding migration to the Netherlands, see Lucassen and Penninx 1997; CPB 2007; Ooijevaar et al. 2013; Dagevos 2011). It is also interesting to note that, in the Netherlands, immigrants from former colonies and lower wage countries performed poorly in the labor market. Around 2000, a heated public debate started over the (perceived) low levels of integration of immigrants in the Dutch society. Core elements of the policies developed after the turn of the century are to restrict family migration and pressure immigrants to learn Dutch.

Regarding the link between migration and social security policy, until 2000, the Netherlands had a system which allowed the export of most benefits, including to outside the EU. Exceptions to this included public assistance and unemployment benefit. The export became more restrictive with the Wet beperking export uitkeringen (Benefit Restrictions (Foreign Residence) Act), which went into effect on 1 January 2000, and limits the right to export benefit to countries with which agreements have been made which enable export of benefit. Export within the EU was not affected. During Parliamentary debates on the Law, the Government announced the intention to make agreements with all countries to which export of benefit is relevant. Indeed, treaties have already been made with most of the countries in which large numbers of claimants reside. These treaties have to ensure that reliable information will be given on issues such as identity, death, civil status, family situation, work, income, address, training, detention and health position of the claimant and his/her family members. The provisions of the treaty require the foreign benefit administration to verify such data and allow the Dutch benefit administration to check these data abroad. The objective of the treaties is to treat beneficiaries abroad in the same way as in the Netherlands (where the required information is already available).

Another development relevant to foreigners is the Koppelingswet (Linking of Insurance to Status Law). This Law provides that persons who do not have a permanent residence permit are not insured and not entitled to benefit as long as they stay in the Netherlands. When they leave the Netherlands, they may claim remaining benefit rights, if any, providing that they satisfy the condition of the Wet beperking export uitkeringen, discussed above. After the turn of the century, there were also changes in the level of benefits payable to persons residing outside the EU. These affected family benefits and parts of the disability insurance. For these benefits, the levels were adjusted to that costs of living in the State of residence.

21.2 Migration and Social Protection in the Netherlands

The Dutch social security system has witnessed important changes over the years, as it became much more focused on providing access to social benefits for those residing in the territory of the Netherlands. This implies that within the Netherlands, migrants are treated in the same way as nationals, provided they are legally staying in the country. Exceptions exist for those recently arrived (less than five years, which is relevant for accessing public assistance). This has been largely influenced by EU law, in particular, Directive 2004/38 (for an in-depth analysis of EU law, see Pennings 2015). Otherwise, there are no substantial differences between the various groups in terms of level of benefit, eligibility conditions, etc. Nevertheless, the situation might be different for migrants who have not spent all their life in the Netherlands, want to return to the country of origin, or have family members in other countries. The EU rules on coordination of social security (Regulation 883/2004) are particularly relevant for specific groups of non-national residents, such as seasonal workers, frontier workers, undocumented workers, or short-term residents.

When it comes to employees’ insurance schemes (sickness, unemployment benefit and disability benefit), persons working in the Netherlands – regardless of their nationality – are treated in the same way as national residents in terms of conditions of access to specific benefits. There are no separate eligibility conditions, differences in level of benefits, or any differentiated duration of benefits for foreign residents. EU nationals can invoke periods fulfilled in other EU Member States to qualify for the unemployment benefit. The duration of this benefit depends on the duration for work, for which periods of employment in other EU countries are particularly relevant. However, periods of employment outside of the EU do not count for accessing unemployment benefits. For sickness and disability benefits, there are no specific eligibility conditions related to the period of insurance. If a person still has an employer, he/she is not paid sickness benefits, but instead the employer has to continue to pay wages (in principle, by covering 70% of the wage). There are no differences in this regard between national citizens, EU nationals and third-country nationals. Sickness benefits and disability benefits do not require any prior periods of contribution.

As regulated by the EU law, unemployment benefits are exportable only for three months within the EU/EEA. Disability and sickness benefits can be exported to countries outside of the EU only if there is a bilateral social security agreement allowing exportability. In order to access the benefits of the national schemes, claimants must reside in the Netherlands. If one works in the Netherlands, this condition is fulfilled. The situation might be different for individuals who are not working, as their possibility to access specific social benefits could depend on their personal circumstances. In that case, it is relevant whether there centre of interest is, in view of all the circumstances, in the Netherlands. If they have also links with another country, it can take some time after entering the Netherlands before this condition is fulfilled. National insurance benefits can be exported also to countries outside the EU, but only if there is a bilateral social security agreement in this regard. The exportability of old age benefits is always ensured, but if there is no bilateral agreement, only the old age benefit is exported at the rate of 50% of the married person pension, which is lower than that the rate for a single person.

21.2.1 Unemployment

Only those employed in the Netherlands qualify for unemployment insurance benefits (Pennings 1990; Pennings and Damsteegt 2009). After 26 weeks of employment during a period of 36 weeks, one is entitled to unemployment benefits if he/she loses at least five hours of work a week. In cases of full unemployment, the benefit is 75% of the daily wage during the first two months, after which it decreases to 70% (with a maximum of 70% of EUR 219 a day in 2020).Footnote 3 A person whose benefit is below the applicable subsistence income may be eligible for a supplement on the basis of the Toeslagenwet (TW – Supplements Act). In order to receive unemployment benefits, individuals must register as job-seekers, regularly prove job search and be available for work. The duration of the unemployment insurance benefit is related to the length of employment and claimant’s age. The benefit can be granted for a minimum period of three months, up to a maximum of twenty-four months.Footnote 4

There is no specific scheme of unemployment assistance in the Netherlands. However, when the right to unemployment insurance benefits has ended, employees born before 1965 who have become unemployed after they have reached the age of 50 may claim a benefit under the Income Provision for Older and Partially Disabled Unemployed Employees Act (IOAW). One specific condition for this is that the (family) income is below the relevant social minimum. Other employees may claim a benefit under the terms of the Participatiewet (Public Assistance Act) if they satisfy a means test on income and capital.

For access to unemployment insurance benefits, EU and non-EU foreign residents are treated in the same way as Dutch nationals. Persons (nationals and foreigners) can receive the unemployment benefit abroad when they are on holidays (subject to some conditions). Due to the EU coordination rules, the export of unemployment benefits to other EU member states is possible for three months. If one stays abroad for a longer period, the unemployment benefit is no longer paid. After six months, all the remaining rights are lost if one returns. Nationals residing abroad in non-EU countries cannot claim unemployment benefits from the Netherlands. This benefit is rarely covered in the bilateral social security agreements signed by the Netherlands.

21.2.2 Health Care

In order to access health care, all persons residing in the Netherlands and all non-residents working in the Netherlands must buy a private insurance regulated by the Zorgverzekeringswet (Zvw – Health Care Insurance act). All persons obliged to buy an insurance must pay contributions, but those with a low income receive a supplement compensating the costs. In this respect, there is no difference between persons based on nationality.

The Zvw includes self-employed and unemployed persons, regardless of their income. Non-residents living in another EU Member State who receive a Dutch pension are also covered by this Act. If they receive a pension from the Netherlands only, they are covered by the Zvw, they have to pay contributions in the Netherlands, and they are entitled to benefits in kind in the country of residence. A person who is within the personal scope of the Zvw is obliged to buy an insurance from a private company. These private companies offer the same basic insurance, although there may be differences in the extent of the choice the insured persons have in care provider. Companies determine the contribution rates for their insurance and that is their major instrument of competition. There are no limitations on which institutions/organizations can make a collective contract with an insurance company. Employees often choose the company with which their employer has made a collective contract. Health insurance companies may not refuse any applicant for the basic insurance and contributions for the basic insurance are the same for all buyers of a particular policy, independently of their state of health. The health care needed by the insured is paid by the insurance, although there is a statutory regulated annual own risk of EUR 385 per person (from which care by general practitioners is excluded).

Non-residents who work in the Netherlands (often, frontier workers) are insured in the Netherlands, for which a specific insurance agency was created. Non-residents who are not working will only be covered by the insurance if they are pensioners receiving only a pension from the Netherlands. Persons are treated in the same way regardless of nationality.

Persons who become ill generally receive sick pay from their employer (i.e. 70% of the wage up to 70% of the maximum daily wage relevant to social security, 219 euro a day in 2020). The Civil Code that deals with this does not distinguish on the basis of nationality. The sick pay is exportable within the EU. It can also be exported outside of the EU only if there is a bilateral agreement in place. Sick pay is payable for a maximum period of 24 months. Persons who do not have an employer anymore are eligible for sickness benefit under the Ziektewet (ZW – Sickness Benefits Act). For this, no prior period of insurance is required and foreign residents must meet the same eligibility conditions as national residents. For export, the same rules apply as for sick pay.

21.2.3 Pensions

Old age pensions are residence schemes (i.e. all residents are insured, but also non-residents working in the Netherlands) paid from contributions and taxes. Everyone earning a certain income has to pay contributions. Individuals who do not have sufficient income are also insured, and this does not affect the acquisition of benefit rights. In order to access a Dutch pension, individuals who are at least 66 years old must have contributed for at least a year (the age will rise in the coming years, according to a schedule in the Act). The level of old-age pension depends on the duration of insurance as insured persons acquire 2% of the pension for every year of insurance (thus after 50 years they have acquired a full pension). It is possible to buy voluntary insurance for the missing years, but most insured persons consider this possibility as being too expensive. For those having acquired an incomplete pension, a supplement is payable under the Participatiewet (the already mentioned public assistance scheme).

EU and non-EU foreign residents can access an old-age pension in the Netherlands under the same conditions as national residents. However, persons who do not fulfill the full 50 year periods receive a lower pension (this rule applies to Dutch nationals as well, but is- in practice- more relevant to non-nationals). They may export a pension from the country of origin, but if that is not the case, and their full income is below the public assistance rate, a supplement is payable from the Public assistance scheme (Participatiewet). Income and property abroad is taken into consideration for this social assistance supplement.

The old-age pension is not means-tested (in fact, there is no means tested non-contributory old-age pension in the Netherlands; there is merely access to social assistance for those who do not get a full old age pension). The old-age pension can be exported to any country, but outside the EU, single persons can receive the single rate pension only if there is a bilateral agreement. The single pension rate is 70% of the standard (which is the same as the public assistance rate for a family). If this condition is not fulfilled, pensioners receive the married person’s rate, that is 50% of the standard (2 married persons both receive this rate, but for a single person, the benefit is lower). For persons who were and/or are non-resident, but worked in the Netherlands, the same conditions and rules apply (one year of work leads to acquisition of 2% of the full old-age pension).

As for invalidity benefits, a main element of the Act on disabled persons (Wet inkomen naar arbeidsvermogen – WIA) is the distinction between persons who are at least 80% permanently disabled and others. This distinction is elaborated under the WIA in the Inkomensvoorziening volledig arbeidsongeschikten (IVA – Income Provision for the Fully Disabled) for the first group and the Werkhervattingsregeling gedeeltelijk arbeidsgeschikten (WGA – Scheme on the Take-Up of Work by Persons Who Are Partially Able to Work) for the second group. IVA and WGA may seem two different types of benefits, but they are payable on the basis of the same Act, the WIA. The idea underlying IVA is that persons who are permanently disabled should be given a good income provision. On the other hand, WGA covers persons who are disabled between 35% and 80%, and individuals who are disabled for 80% but whose disability is not considered permanent. The threshold for WIA is 35%, hence higher than for WAO (15%). WGA refers to its recipients as ‘persons who are partially able to work’, instead of ‘partially disabled’, since the main focus is on their ability to work.

WGA recipients receive a wage-related benefit if they satisfy conditions on the employment past (if they do not satisfy these conditions they qualify for the so-called wage-supplement or follow-up benefit) and the duration depends on their employment past. The rules for entitlement and duration of this benefit follow those of the WW (Unemployment Benefits Act). After the right to the wage-related benefit has expired, individuals receive a wage supplement if they have an income of at least 50% of their earning capacity. Those who do not have such income receive a so-called follow-up benefit. The wage supplement is relatively generous, whereas the follow-up benefit is very low. These rules are meant to encourage incapacitated persons to take up work again. For persons who are disabled less than 35%, there is no income provision under the WIA. Employers are supposed to keep these persons in work and if they lose their job, they have to rely on WW benefit or public assistance.

These benefits are granted to EU and non-EU foreigners under the same conditions as those applied to Dutch nationals. When residing in another Member State they can claim these benefits from the Netherlands under the rules of Regulation 883/2004; if residing outside the EU, they receive these benefits if a bilateral agreement is made.

21.2.4 Family Benefits

Maternity benefits cover employed women, although a scheme for self-employed women was also recently introduced. These schemes apply to both Dutch nationals and foreigners residing or working in the Netherlands. Maternity benefits are granted for 16 weeks and do not require a certain minimum period of employment or insurance, but one has to be insured at the beginning of the pregnancy leave. Export of these benefits is regulated by the EU coordination regulation. Export outside the EU depends exclusively on bilateral agreements. There is no specific scheme of paternity benefits in the Netherlands. There is a parental leave granted for a period of 26 weeks and in some collective agreements, employers pay part of the wage during the parental leave.

Insured persons- either national or foreign residents- are entitled to child benefits for children under the age of 16 who belong to his/her household; or those under the age of 18 who are supported by the applicant to a considerable extent. The insured person is entitled to child benefits for children of 16 or 17 years of age, provided those children are fulfilling the obligations of the Act on compulsory education or are exempted from these in order to get a so-called start qualificationFootnote 5; are attending school abroad or; are unemployed and registered with Uwv. In principle, insured persons who live outside the Netherlands are not entitled to family benefits, except for those subject to wage tax in the Netherlands or subject to Dutch law under EU Regulation 883/2004. An insured person cannot claim child benefits for children who live outside the Netherlands on the reference date and a stay of more than three months abroad is equated with living outside the Netherlands. These exclusions do not apply when a treaty is made between the Netherlands and the country in which the insured person or child resides. This includes the countries within the territorial scope of Regulation 883/2004. Child benefits are paid from taxes and as soon as a person is a resident of the Netherlands, s/he receives the benefit. If the child does not live in the household, the claimant must prove that s/he contributes to the costs of living of the child. If the child lives outside the EU, a bilateral agreement is necessary to ensure payment. Recently, the level of family benefits has been reduced for non-EU countries, taking into account the costs of living in that country. Sometimes it is difficult to transfer money to the child in order to show that one contributes to the costs of living of the child. Within the EU, there is a consistent system but outside the EU, this has been regulated by bilateral agreements.

21.2.5 Guaranteed Minimum Resources

Residents in the Netherlands who do not have sufficient income for the basic costs of living are eligible for public assistance under the Participatiewet (Public Assistance Act). The rates for this benefit are laid down in the Act; for actual entitlement and the level of benefit, the income and resources (capital) of the claimant are relevant, including that of the person he/she is living with. Claimants must seek work and accept job offers, unless they are exempted from this. Claimants are now also expected to do some unpaid work in exchange for their benefit, but the actual forms and enforcement of the rules vary between municipalities. This benefit is payable as long as one satisfies the conditions.

Public assistance is an area where the link to the Dutch territory has been strengthened in the last decades. Persons residing abroad cannot claim public assistance from the Netherlands. EU and non-EU foreigners residing in the Netherlands for less than three months are not entitled to claim public assistance. After this period, there is the risk of being expelled if one claims the benefit. After five years of legally residing in the Netherlands, there is full equal treatment for both EU and non-EU nationals. Otherwise, there are no differences in conditions (level, preparedness to work, waiting periods, etc.).

21.2.6 Bilateral and Multilateral Social Security Agreements

The bilateral/multilateral social security agreements signed by the Netherlands do not give a full solution to access to benefits (Van Everdingen et al. 2014). The agreement with the largest group of foreigners living in the Netherlands (from Surinam) allows export of some benefits only to that country. Since there is no significant new migration inflow from this country (the main inflows from Surinam took place in the 1970s), there is no real need to help with aggregation of periods, etc. The bilateral agreement with Turkey is interesting because it supplements multilateral agreements (of the Council of Europe and also Decision 3/80). It covers access to disability benefit and the export of pensions and family benefits (van der Mei and Eisele 2012). The bilateral agreement with Morocco also assists the covered persons in exporting benefits, although, in this case, provisions have been inserted in order to reduce family benefits to the costs of living in Morocco.

The agreements with the countries that represent the three main destinations for Dutch nationals residing abroad (USA, Canada, Australia) are meant in particular for those who permanently left the Netherlands. They help to access Dutch disability benefit and export old-age pensions. Issues as minimum benefits and unemployment benefits are outside the scope of these agreements.

21.3 Conclusions

The Dutch system treats foreigners working in the Netherlands in the same way as national residents when it comes to accessing unemployment benefits, disability benefits, old-age pensions and family benefits. For persons coming to the Netherlands and not working, there is a period during which they are not eligible in which they have to acquire the status of resident. Persons claiming public assistance may lose their residence status if they claim this benefit during the first five years of residence. Persons coming from other Member States or from outside the EU may have a gap in the acquisition of old-age benefits in the Netherlands, since this is a pro rata benefit. However, they may have acquired benefit in their countries of origin. If not, they can claim public assistance, but that means that their other pension rights and property are taken into account.

Export of disability and old-age benefit is guaranteed within the EU, but a bilateral agreement is needed for export outside the EU. Export of unemployment benefits is possible under serious restrictions only, whereas the public assistance benefit cannot be claimed from abroad. Also, there is a tendency to reduce the level of benefit payable to other countries, taking the costs of living into account. There is now considerable support for this in Dutch politics and some political parties in Parliament would even prefer to terminate export of the non-contributory benefits to countries outside the EU. So far, only an act on the reduction of family benefits and part of disability benefit has been adopted, although this requires a revision of the bilateral agreements that are currently in place.