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Dutch financial education body calls for mandatory pensions saving

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Nibud, the Dutch consumer organisation for financial education, has called for mandatory pension saving for all workers, including the self-employed.

Citing several surveys showing that many people fail to take the initiative to financially prepare for retirement, it said it feared that more pensioners would struggle to get by in 15 to 20 years time.

According to Nibud, looking ahead and setting money aside for later was difficult for consumers, who also tended to have an aversion against moving to a smaller and more affordable home.

In its opinion, people would benefit more from automatic pensions saving than from organising their financial future themselves, as they almost always put more value on their present situation and spend accordingly.

It suggested that the automatic pensions accrual would be subject to conditions, such as a minimum accrual percentage.

Only those who could prove having sufficient income for all their expenses after retirement should be allowed to deviate from the default option, Nibud said.

The consumer organisation, which surveyed more than one thousand 65 to 80-year olds, indicated that one in three pensioners already had problems getting by financially.

In particular, it found that respondents had financial difficulties when they had been divorced (51%), were living in rental property (33%), or had been self-employed (44%). 

Nibud added that 36% of Dutch pensioners had less than €5,000 in savings, and that it was worried about low-income pensioners who needed care.

Nibud made clear that it did not support suggestions to allow workers to use pension savings for the purchase of a home.

“The expectation that pensioners can live off the proceeds of their property is too optimistic, as most pensioners want to keep on living in their house as long as possible for social and health reasons,” it said.

In the organisation’s opinion, every Dutch citizen should be offered an insight into their income and expenses after retirement every five years, because careers were more diverse than ever.

It suggested that employers, pension funds as well as organisations for the self-employed should facilitate periodic “insight conversations”.

Recently, Dutch employer organisation AWVN proposed to make the second pillar accessible for all workers, by replacing the current special tax benefits for self-employed with tax-friendly pensions accrual.

The AWVN said that it had noted that social security had lost its connection with the labour market, resulting in a too big gap between employees and self-employed.

 

 

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