NETHERLANDS - The Dutch government has been unable to formulate a new policy on the ailing tax-friendly ‘levensloop', or life course, scheme.

The cabinet "will look into the options on how the intentions of the coalition agreement can be realised against the background of simplification of fiscal schemes for income reservation," it said in a clarification on the social affairs and employment department's budget.

The pensions sector feels that changes are needed to make to the levensloop more attractive. So far, only 5% of workers are participating in the scheme.

Nevertheless, the social affairs department's website says it expects the number to grow by over one-third to 750,000 in 2008, it said.

In the coalition agreement concluded earlier this year, the government said that the levensloop would be extended and shaped to include the start-up of a business, a gap between jobs and the transfer to part-time work.

The coalition partners also promised to look into how the ‘spaarloon' savings scheme could be merged into the levensloop and how the levensloop could also be opened up to self-employed workers.

"I am not surprised about the delay," professor Lans Bovenberg, and one of the architects of the levensloop, told IPE. "But I had hoped the government would have mentioned the alternatives it is considering."

"The issue is complicated, and the cabinet needs the support of the social partners," he added.

Although the largest trade union, FNV, has indicated its support for a merger of the spaarloon into the levensloop, there is tension between the government and the unions over the cabinet's proposal to extent the right of dismissal," Bovenberg pointed out.

Nevertheless, Bovenberg said he was still optimistic about the future of the levensloop. "Despite the uptake of the levensloop being just one-tenth of spaarloon, the accumulated savings are almost equal," he said.

"We expect that the government and the social partners will reach an agreement on the future of the levensloop next year," said a spokesman of levensloop provider Loyalis. A subsidiary of the €211bn civil service pension fund ABP, Loyalis covers approximately 10% of the levensloop market.

The present the levensloop scheme allows workers to save 12% of their salary tax-free every year. They can use the balance to finance intermediate leave, parental leave, care leave and education.

Although the scheme is meant to discourage early retirement, it still allows the balance to be used for this purpose.