With population aging peaking in 2040, the sustainability of public finances is a challenge for the coming decades. A crucial role in this is played by the state pension (“AOW”). In the 2025 Budget Memorandum, the AOW accounts for almost 12% of the annual government spending. As part of the interdepartmental policy research “Pension Accumulation in Balance,” Biesenbeek et al. (2024) show that for many Dutch households, the AOW is crucial to maintain living standards after retirement and especially to prevent poverty in retirement. The AOW  is especially crucial for an adequate pension for women, all the more so because of the large gap between men and women in the second-pillar pension (Kali et al., 2021).

In this study, we analyze the behavioral responses triggered by individualizing the AOW, with a focus on the relationship between AOW and 1) cohabitation and 2) (second-pillar) retirement savings. This focus is relevant in view of the effects of individualizing the AOW on the adequacy of future household retirement income.