Two national insurance schemes provide benefits regardless of the level of income or assets. This means that government money ends up in the hands of people who do not need the benefit. National insurance is a compulsory insurance for which every resident of the Netherlands is insured. In recent decades, benefits in kind have been cut and we are obliged to take out additional insurance. The best example of this is the General Widows and Orphans Act. This law was replaced on July 1, 1996 by the General Surviving Dependents Act (ANW). Two other national insurance schemes, AKW and AOW, remain independent of income.
Who receives child benefit?
The child benefit is paid by the Social Insurance Bank (SVB). Parents who live in the Netherlands, or at least work in the Netherlands, are entitled to child benefit insofar as they have minor children. Through these contributions, the government helps pay for the costs of raising the children. The amount of child benefit depends on the age of the child. It does not matter how much the parents earn or have assets. Every parent who meets the conditions receives a benefit from the SVB four times a year.
Who receives a benefit under the General Old Age Pensions Act?
The AOW is a basic pension for pensioners. Employees often have the option to build up additional pension with the employer. Self-employed people are offered the fiscal opportunity to reserve part of the profit as an old-age provision. Everyone is entitled to the AOW. It makes no difference whether there is a supplementary pension. Anyone who has lived in the Netherlands from the age of 15 until retirement age is entitled to a full AOW benefit.
Tax money ends up with insured people who don’t need it
The AOW and the AKW are national insurance schemes. Together we bear the burden for these rights. And rightly so, because we also benefit from it together. On the other hand, you could argue that it is unjustified that people who consciously do not have children have to help pay for other people’s children through child benefit.
Yet it is logical that all taxpayers contribute proportionately to national insurance, even if they do not benefit from it themselves. This is also the principle of insurance. The insured parties jointly bear the joint costs. The same applies, for example, to housing allowance and mortgage interest deduction. Tenants contribute to the mortgage interest deduction and homeowners contribute to the rental allowance.
Why should high earners be entitled to child benefit and state pension?
High earners receive just as much child benefit and state pension as people who have to survive on a minimum income. A similar situation has been corrected in England. The starting point was that people with a top income no longer need to contribute to the costs of supporting their children.
You could also argue that high earners pay extra tax through income tax. They pay 52 percent tax on the highest part of their income.
However, people with very high incomes are not looking for a few hundred euros per quarter in child benefit or a benefit that can amount to the minimum wage from the AOW.