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Accrual cut to slash pensions of younger Dutch by 30%, union chairman warns

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  • Accrual cut to slash pensions of younger Dutch by 30%, union chairman warns

NETHERLANDS – The outgoing chairman of Dutch union CNV Jongeren has claimed the government's proposed cut of the yearly pensions accrual from 2.25% to 1.75% would slash young workers' future pensions by as much as 30%.

IJmert Muilwijk told IPE: "If current pension rights have to be cut by 2%, everybody is up in arms, but hardly anybody seems to be concerned about a future decrease of such magnitude. When the young generations become aware of how much less their future pensions will be, the shit will hit the fan."

Muilwijk, who steps down next week, said the issue of pensions had continually been high on his agenda during his three-year term as chairman.

In his opinion, pensions accrual will be the biggest challenge for his successor, Michiel Hietkamp.

He said the next chairman must ensure the full amount of the €250m made available by the Cabinet – to compensate for the accrual cut – benefits lowly paid workers rather than their colleagues with salaries of more than €100,000.

However, respecting a recently launched reform plan tabled by three Dutch political parties' youth branches – which called for an immediate overhaul of the current system, focusing on individual pensions saving and freedom of choice for provision – Muilwijk said he had his doubts.

"Their plan lacks solidarity, as well as the advantage of a collective approach," he said. "But their initiative underlines that young workers are fed up with the current system."

Last year, Muilwijk was one of the founders of PensionsLab, a think tank in which 60 members of the youth branches of the unions CNV, FNV and MHP are developing a "vision on pensions".

The 'Lab' was established on the back of a pensions master class, which has already produced 30 young workers for seats on pension fund participant councils, or even on boards.

The Pensionslab advocates individual freedom of choice for both the desired pension and the retirement age, as well as opening up the second pillar for self-employed workers.

In addition, the Lab wants to grant younger generations more pension rights for their average contribution.

"The current discussion about the pensions accrual actually provides a proper opportunity for the introduction of [this sort of] accrual," Muilwijk said.

He also said the options for mandatory saving for future care should be "seriously looked at", given the ageing population and increasing life expectancy in the Netherlands.

"We need to think properly how we are going to finance the quickly increasing costs of care," he said. "Currently, the care costs are the unsettled bill of the future."

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