THE NETHERLANDS - The Dutch government should give workers the option of participating in the tax-friendly schemes ‘spaarloon' and ‘levensloop' simultaneously, in order to make the latter more attractive, said the Dutch Association of Insurers (VvV).

In addition, the government must provide certainty on the future existence of the levensloop, or life course, scheme, the VvV explained in a letter to Herman Wijffels, who is supervising the negotiations on a new Dutch cabinet.

As a way of raising participation in the levensloop above its present 7%, the government must also remove employers' obligation to pay levensloop contributions to all their workers, regardless of whether they all participate or not, the VvV recommended.

The present levensloop scheme allows workers to save 12% of their salary tax-free, and use the taxed balance to finance temporary leave. Although the scheme is meant to discourage early retirement, it still allows the balance to be used for this purpose.

Under the popular spaarloon scheme, employees can save a €613 tax-free each year. The money is blocked for four years. The money taken out is taxed.

Participation in the levensloop could be encouraged by offering a bonus at the start, instead of a tax discount when the levensloop balance is taken out, the insurers added.

Three-quarters of non-participants don't intend to join the scheme this year, a survey commissioned by the insurers has found.

The remaining 25% still aren't sure of participating in the levensloop. For three-quarters of this group, early retirement will be the main motivation for joining, the VvV said.

In case the financial burden to society from a combined spaarloon and levensloop becomes too heavy, the deposit for spaarloon could be discounted from the maximum deposit for levensloop, the VvV suggested.

Outgoing Social Affairs' minister Aart Jan de Geus is expecting a broadening of the levensloop scheme now his Christian Democrat party is on course to a cabinet with the labour party, instead of the present coalition with the liberal party VVD.

"I see a real opportunity for a spaarloon integrated in the levensloop, daily paper Het Financieele Dagblad quoted him as saying. De Geus also suggested that the levensloop balance be used for additional education.

Last year, Professor Lans Bovenberg of the academic pensions platform Netspar and one of the architects of the levensloop, also pleaded in favour of a merger of the spaarloon and the levensloop.

In Bovenberg's opinion, the merged scheme should continue with a tax-free deposit and a taxed benefit. For special purposes such as maternity and paternity leave or educational sabbaticals, the introduction of extra tax discounts should be considered.

The professior also said the government should allow the levensloop balance to be used for the purchase of a property, and for income supplementing after a demotion.