Spain and its pension system have been chaining reforms for more than 15 years with the aim of guaranteeing its viability. Among them, the oldest and about to be completed (Law 27/2011), which introduced two retirement ages based on contributions; to which are added Law 21/2021, which created the Intergenerational Equity Mechanism (MEI), and the subsequent Royal Decree-Law 2/2023, which toughened these over-quotations.
However, the adjustments continue to leave a structural hole that has forced the State to inject another 48 billion euros in 2025 to sustain the system, despite the record of Social Security income. In this way, while Spain relies its survival on squeezing current contributions, the Netherlands has spent years perfecting a radically different model that has crowned it the undisputed king of retirement worldwide.
According to the Mercer CFA Institute Global Pension places the Netherlands in first place in the world with an overall score of 85.4 and a grade of “A”. Spain, in sharp contrast, stagnates in the “C+” category with 63.8 points, severely penalized by doubts about its long-term mathematical viability (obtaining a meager 34.2 in sustainability).
The international report defines leading systems as those that constitute “a robust retirement income system that offers good benefits, is sustainable and has a high level of integrity.” The abysmal difference between the Dutch success and the tensions of the Spanish model lies in a financial architecture supported by three pillars that dilutes the demographic risk.
The basic pension is 1,558 euros per month
The success of the Netherlands begins with its first pillar, which is having a basic state pension (AOW). It is a pay-as-you-go benefit financed by taxes, but with a very different philosophy from the Spanish one. To understand it, instead of depending exclusively on previous salary history, this guarantees a special minimum and basic pension for all citizens.
For this year 2026, the AOW monthly net pension for a person who lives alone amounts to 1,558.15 euros, while for retirees who live as a couple the net amount is around 1,024 euros per person (can be consulted on the official website). This foundation ensures that no senior citizen falls into poverty, and is precisely what gives the Netherlands its very high score in the adequacy subindex (86.1 points, one of the highest on the planet).
But where the Netherlands really teaches Spain and most of Europe a lesson is in its second pillar, which is occupational pension plans. Through collective agreements, the vast majority of Dutch workers are obliged to contribute to private pension funds managed by social partners.
The assets managed by these occupational pension funds in the Netherlands are equivalent to 147% of its Gross Domestic Product (GDP). While the Spanish system depends on the contributions of today’s workers to pay this month’s retirees, the Dutch retiree complements his public pension with the real performance of global financial markets generated by his own savings accumulated during his working life.
Far from settling into its first world position, the Netherlands is immersed in a historic reform (the Wet toekomst pensions or Future of Pensions Law) which must be completed before January 1, 2028.
To prevent the aging of the population and market volatility from bankrupting companies or the State, the country has banned new “defined benefit” plans. The entire system is migrating towards “defined contribution” schemes. That is, what is set and guaranteed by law is the percentage of salary that is saved each month, but the final pension will depend on the profitability of the fund, thus transferring part of the risk and guaranteeing that the system never enters an unaffordable structural deficit.
Work until age 67 in a dynamic labor market
As in the Icelandic case, demographics and withdrawal rules are the last piece of the puzzle. The normal retirement age in the Netherlands is already 67 years old and has mechanisms that point towards 70 years in the future, directly linked to life expectancy. Let us remember that in Spain, Law 27/2011, which will end in 2027, will establish the retirement age at 67 years.
In addition, the country has an extremely dynamic labor market that encourages senior participation. In fact, the Netherlands leads the entire European Union with a general employment rate of 83.5%, well above the rates recorded in Spain (which are around 65.7%), which means that they have a proportionally much larger base of active taxpayers to sustain the economic gears.