“The lower pension incomes of migrants are the result of a the interplay of several social factors”

What is the focus of the paper?

Across the entire Western world, migrants have lower pensions than non-migrants — the so-called “migrant pension gap.” In the Netherlands in particular, 40 percent of non-Western migrants live in pension poverty, compared to “only” 6 percent of Western migrants and 3 percent of non-migrants. This paper investigates the causes of this pension gap through a systematic literature review.

What are the key findings?

The causes of the migrant pension gap can be summarized in four categories: institutional, economic, sociocultural and relational factors. The institutional factors relate to differences in access to pension schemes and to the influence of policy choices on pension entitlements. The level of the public pension (AOW) is, for example, dependent on the number of years someone resides in the Netherlands. The economic factors focus on the labor market and include, among others, income inequality, interrupted careers and long-term unemployment. For instance, migrants more often than non-migrants are self-employed and often do not own a house. The sociocultural factors are related to limited language proficiency, unfamiliarity with the pension system and differences in financial habits. For example, migrants are sometimes not aware of existing pension schemes, leading to non-use of AIO-facilities, the payment of interest may be prohibited from a religious conviction. Finally, relational factors play a role, such as the support of family or community. These factors can have a stimulating influence, but may also create constraints in preparing for retirement.

What are the implications?

The authors make policy recommendations to reduce the migrant pension gap in the Netherlands:

  • Enable secure and privacy-conscious data sharing, so that the Social Insurance Bank (SVB) can more actively approach people who are entitled to the supplementary income provision for the elderly (AIO).
  • Improve the labor market position of migrants, so migrants are better prepared for their retirement.
  • Inform migrants in a timely and active way about their pension rights, through integration courses, employers or online.
  • Simplify the portability of pensions.