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Actuaries claim raising AOW age is unnecessary

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  • Actuaries claim raising AOW age is unnecessary

NETHERLANDS - A gradual rise in the official Dutch retirement age from 65 to 67 is not necessary and undesired, the Actuarial Society (AG) has suggested, as transitional rules for the creation of additional savings schemes will make pensions much more complex, expensive and time-consuming.

The occupational organisation has raised such concerns in response to the findings of the Bakker Commission, which proposed there should be a gradual increase in the state pension AOW by a month each year from 65 to 67.

However, the AG argued in its report the committee had not addressed the effects of such a move for second pillar pensions and an easy solution could be sought as workers' retirement ages will rise anyway, even without increasing the AOW age, or raising the AOW age to 67 in one step.

More importantly, temporary measures could create additional pension costs of between 5% and 50%m in situations where pension funds need to bridge a gap between their retirement arrangements at 65 and a higher AOW age, according to the AG.

"Quite a few pension providers are still busy implementing the effects of the early retirement legislation VPL, which was introduced in 2006," said the body on the possible impact of a higher AOW.

In its opinion, doing nothing would be cost-neutral whereas a rise in the pensionable age to 67 in a single step could instead create a drop in pension costs of between 10% and 12%, according to the AG.

The actuaries' representative body said communication to the participants about a rise of the AOW age would be of paramount importance to social partners, pension providers and the government.

A spokesman for the AG acknowledged its report has been finalised before the most serious effects of the credit crisis - and its impact on the stability of additional pension savings - had become clear, though the market turbulence has not affected the AG's conclusions on the retirement age.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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