Dutch finally agree on pension reform deal
Wednesday, October 19, 2011
After months of negotiation, the Dutch Government has managed to reach a final agreement on how future pension provision will be shaped in the Netherlands
Social Affairs Minister Henk Kamp, who was forced to make changes recently to an initial 'deal' on pension reform by trade unions and opposition parties, was able to confirm that a compromise had been reached on 19 September, despite remaining trade union resistance.
The Minister claims that with the reforms will mean that the Netherlands is capable of dealing with an ageing population and that pension provision for pension schemes is more sustainable in difficult market conditions.
The new legislation will ensure ongoing pension provision for young and old at a saving of 0.7% of the country's GDP, helping maintain the sustainability of the government's finances.
The last-minute changes made by the Minister eventually ensured that the majority of the opposition parties came on board during heated debates which lasted well into the night on 16 September.
The new proposals ensured in particular that hard labourers and people on low incomes are still able to take early retirement.
On 19 September, the unions voted for a final time on the proposed changes. FNV, the largest federation of unions, came together for a federation meeting. The majority of the 19 chairmen of the federation's unions agreed to sign the deal. The biggest of the unions however, with the majority of members, was against the proposals.
The main points of the new pension agreement are:
- The increase of the retirement age from 65 to 66 years in 2020, five years later this will increase to 67
- Second tier pensions will be more dependent on the investment results and market conditions that pension schemes have to work with
- Premiums for second tier pensions theoretically can not rise with more than inflation
- The decrease of the state pension by 6.5% per year at early retir ment and the increase of the state pension by 6.5% per year for every year worked longer
- The state pension will be guaranteed to rise in line with inflation until 2028
- An extra increase of the state pension of 0.6% in 2013 – this will ensure that people with low incomes can seek early retirement before 2020
- Third tier pension saving will be less attractive as tax advantages disappear
First published 20.09.2011
azeevalkink@wilmington.co.uk
