In service flat Oostmolensteyn inflation is the talk of the day: ‘We used to be really frugal’

“You make noodles with vegetables and ham, right?” Dave Daal (74) watches his table mates, who are stirring their coffee. Yes, yes, that’s right, they nod. “Well, I’m making the noodles with chicken now. That makes a difference in the price.” Smart, say the others.

During the coffee morning for elderly people from Rotterdam in the auditorium of service flat Oostmolensteyn in the center of Rotterdam, the conversation revolves around money matters. Day spending coach Irene van Kouwen of home care institution Aafje had asked whether they notice that everything is becoming more expensive due to inflation.

Those in attendance, mainly women, some men, are between seventy and ninety years old. They meet weekly to chat and to take exercise classes. There are regular activities organized by students. The atmosphere is upbeat, but Dave is serious. “I used to get Chinese or a pizza now and then. I don’t do that anymore. And I’ll have a banana instead of dessert.”

Not everyone is cutting back on food, but they all recognize the rising prices in the supermarket.

“I’m very careful about what I take with me. Everything is more expensive. One product costs a dime more, the other product 15 cents.”

“At home I look through all the folders. If the jam is on offer at Dirk, I go to Dirk for jam. And for coffee to the Albert Heijn, if they have a ‘two for the price of one’ offer there. That can make a difference.”

“Sunflower oil! No more to pay. I’m now throwing my bitterballen in the airfryer!”
“I paid 4.80 on a terrace for a glass of wine!”
“We went out for dinner recently – I had to pay 18.50 for a hamburger. You will not see me there again.”

Ridiculous, everyone thinks.

Retired people are one of the few groups in the Netherlands that has not seen their purchasing power increase in the past ten years. Between 2011 and 2020, they lost approximately 1.3 percent in purchasing power, according to CBS figures. The purchasing power of employees increased by almost 21 percent during this period.

The cause is the continuing malaise at the large pension funds. Since the financial crisis of 2008, they have been banned or barely able to distribute pension increases, because their financial health has been under pressure all this time due to the lower interest rate. In the meantime, prices for food, fuel and gas continued to rise. Employees saw their wages increase almost every year. But the supplementary pensions came to a standstill.

half brown

Bep Schuurman (77) from Rotterdam has certainly noticed this. “You do your shopping and you spend more and more for the same thing.” When she went to the bakery this morning, the half brown that she always buys was suddenly 1 euro 20 instead of 1 euro and 5 cents. “I think that’s a decent amount.”

Mrs. Schuurman is well off, she says. She has her husband’s survivor’s pension and a small pension because she started working half days in a company canteen when the four children went to school. But she has to be careful, she says. When she has paid the rent and medical expenses, “there’s a whole chunk gone.”

An advantage for older people, she thinks, is that they have generally learned to live more frugally than younger people. At least she and her husband were always frugal. “We also did fun things. With the kids to the cinema and then to McDonald’s. But nowadays things have to get crazier. To Disneyland in Paris or something. And children want the most expensive designer clothes.”

Her children sometimes wanted that too, but she didn’t start there. She still remembers cutting the Nike logo out of a piece of cloth and sewing it onto a shirt. “So! You too a Nike shirt.”

Bep does not yet have higher heating costs, but they will certainly come. She has already applied for the allowance for Rotterdam residents with a small grant. “I don’t waste money, but if I want something, I buy it. My children also say: enjoy it, mom!” She realizes that peers with only AOW pensions do not have that luxury. “They have to think about every expense.”

basic income

The purchasing power of pensioners with the lowest incomes – only an AOW benefit – has remained stable. This is because the AOW benefit increases with the average development of collectively negotiated wages in the Netherlands. The AOW is now grossly 1,850 euros per month for a single person.

Retirees are also the group with the lowest poverty risk, because the AOW is in fact a basic income for the elderly. The AOW amount is higher than the social assistance benefit and is well above the poverty line. Where the poverty risk for 55 to 65 year olds is still more than 7 percent, it drops to 2.4 percent for 65 to 75 year olds. according to CBS figures.

Retirees are the group with the lowest poverty risk, because the AOW is in fact a basic income for the elderly

This makes the Netherlands unique. In many other countries, including Europe, poverty among the elderly is a much bigger problem, says Marike Knoef, professor of economics at Leiden University and director of pension think tank Netspar. That does not mean that it is easy to get by on an old-age pension alone, she says. “You will have to watch your expenses carefully.”

Retirees who nevertheless live in poverty have generally not built up a full state pension because they have not lived in the Netherlands all their lives. This is especially true for migrants and refugees. These elderly are entitled to a type of social assistance benefit for pensioners: the Supplementary Income Provision for the Elderly (AIO). But many people don’t know that, so they don’t apply for that supplement. Strict capital requirements also apply. For example, if you own a house for sale, you cannot get an AIO.

The poverty risk also rises slightly among the over-85s. “The elderly are often more vulnerable,” says Knoef. “In the past, they built up a little less supplementary pension on average and are more often confronted with higher healthcare costs.”

Chalet at the campsite

Anneke de Bruijn (73) does not have money worries, she can be brief about that. Her (younger) husband still works, and she herself has a good pension. They live in Rotterdam, have a chalet at a campsite in Numansdorp where they are often in the summer season and have a house in Greece.

Anneke de Bruijn started working at the sewing studio of Peek & Cloppenburg when she was fourteen and has always worked until her retirement. She had her own hair salon and worked for the KNVB for many years. “I don’t know what WW is.” She’s still not the type to sit still. She has five children whom she takes turns helping with the household chores – doing laundry, ironing. And she is a volunteer at the coffee mornings of the Aafje care institution.

She can manage on her own, and does not have to cut corners on the hairdresser and the nail technician. She also does not go to another supermarket if a product is cheaper there. “But I know others should.”

Mrs. de Bruijn has other problems: her husband is ill. She is concerned about that. When we are back in the hospital, I realize how precious health is. Priceless actually.”

The pensioners with the highest pension incomes have experienced the strongest decline in purchasing power in recent years. The AOW may be increased annually, but for this group this is a relatively small part of their income. Their supplementary pensions (via a pension fund or insurer) are higher. And it is precisely those pensions that have not or hardly been increased for twelve years, so that they can buy less and less for them in the store.

People with high incomes have the advantage, says professor Knoef, that they have more savings options. “For example, they can buy less luxury goods.” However, that can feel like a major setback. After all, you have to live more frugally than you expected.

“Retirees also have fewer opportunities to increase their income,” says Knoef. As a working person, it is easier for you to work a few extra hours, ask for a pay increase or change jobs.

Pension reform

This year, purchasing power is also under pressure from people with only AOW or at most a small supplementary pension. Because this year, wage growth – which determines the AOW increase – cannot keep up with inflation. Trade unions fail to make such high wage agreements in collective labor agreements.

Most supplementary pensions seem to be able to be increased slightly this year, due to more flexible rules from politics, in the run-up to a major pension reform. In most cases, however, this will not result in a full inflation correction either.

Retirees will lose 2.8 percent in purchasing power on average this year, the Central Planning Bureau (CPB) expected in March† That number was slightly higher than the decrease in purchasing power for all Dutch people: 2.7 percent. But the setback could just turn out to be more serious. Because the CPB made a fairly optimistic assumption in this estimate: that energy prices will fall again after the summer.

Day spending coach Irene van Kouwen asks those present at the coffee morning how they save money.

“Stay in bed,” shouts a jolly lady. Everyone laughs.
“Turn down the stove and put on a cardigan.”
“I add water to the shampoo and detergent. Then it lasts longer.”
“Show shorter showers.”
“Yes! You can put the plug in the shower tray and get out before it overflows.”
“You can also shower three times a week instead of every day.”
“Damn, I think that’s disgusting.”
“What now, filthy? We used to go to the tub once a week!”
“Yes, haha, we did ages with a bar of soap. We were really frugal back then.”