Countries have social policies to improve the well-being of individuals. However, not everyone benefits equally from them. Sociologist Mustafa Firat compared the complete life courses of 80,000 people across Europe and examined how accumulated inequalities determine retirement outcomes. One example is pension income, Firat explains: ‘In many countries, your pension is linked to the number of years you have worked. You accrue less pension if you are unemployed for a long period, for example because you are ill, cannot find a job or are looking after children at home.’
Pension inequality
Firat’s research shows that gender and educational level play a role in pension income, disadvantaging women and lower-educated individuals. Other factors, such as family situation or career path, also matter and influence how people experience retirement. People with stable career trajectories and strong social networks are more likely to retire voluntarily and less often forced to continue working beyond the statutory retirement age than those with less stable life courses. While the welfare state is intended to reduce inequality, it sometimes falls short. For example, women often receive lower pensions than men because they are more likely to interrupt their careers or stop working when they have children. These differences affect pension income, retirement timing and adjustment.
The Dutch pension system and culture
In this respect, the welfare system in the Netherlands, especially the pension system, serves as an example for other countries, Firat argues. In the Netherlands, people receive the state pension (AOW) when they retire, which is not based on the number of years they have worked but on the number of years they have lived in the country. In addition, many employers offer supplementary pension schemes. This helps reduce financial inequality between different groups. Another pillar of well-being is the culture of work–life balance and social participation. “For many Dutch people, life is not solely about work,” the sociologist says. “Time is also set aside for hobbies or volunteer work – much more so than in other European countries. As a result, many Dutch retirees have a more active social life and enjoy relatively good mental health.”
Firat advises other European countries to take the Netherlands as an example to reduce retirement inequality between different groups in society. “There needs to be greater recognition of these differences,” Firat says. He therefore advocates more tailored policies. “Governments should support people who are struggling, for example by encouraging organizations to offer permanent contracts in order to prevent long-term unemployment. In addition, governments should financially compensate women who perform unpaid work for role-related inequalities. Improving parental leave and making childcare more affordable would also help to reduce retirement inequality.”