The Dutch Government has managed to reach an agreement on the new Pensions Act with its social partners.

The act draws on compromises that employee and employer representatives made last year in June to address the volatile financial markets and an increasingly ageing population and confirms theaccuracy of leaked information concerning the new act over the past few weeks.

The new legislation will ensure ongoing pension provision for young and old at asavingof 0.7% of the country's GDP, helping maintain the sustainability of the government's finances.

Due to internal disagreements from within the trade union federation (FNV) on the spread of risk and the option of early retirement for blue-collar workers, the act took four months longer to complete than was intended. Initially pension reforms should have been agreed upon in February.

The state pension will be guaranteed to rise in line with inflation until 2028 and will also see a 0.6% increase annually from 2013.

With regards to workplace pensions, it has been agreed with employers that since investment returns can be disappointing, pension levels do not have to be guaranteed - taking away industry concerns that schemes would take too many risks to hit set targets.

Contributions will also remain more stable than before and will not be decreased in economically prosperous times nor immediately increased in times of hardship. By ensuring the latter, the government makes sure that in difficult times the recovery will not be stalled by extra pension liabilities amongst employees. Currently the average Dutch person works one day a week to provide for his pension.

The retirement age in the Netherlands will also rise from 65 to 66 in 2020 and to 67 in 2025. It will also be made more attractive for people to keep working after they have reached retirement age. Employers will receive a 'mobility bonus' for employing elderly workers.

People who will work after turning 66 will receive 6.5% more state pension but mirroring that, people who retire early will receive 6.5% less.

One union however, FNV Bondgenoten, is still not satisfied due to the inflexibility this agreement provides for people in manual work who need to retire earlier. However, the union has been told that there is room for negotiation in regards to different sectors.

First published 10.06.2011

azeevalkink@wilmington.co.uk