NETHERLANDS - VVD and PvdA, the two leading political parties in the Netherlands, have agreed to bring forward an additional increase in the official retirement age.

During negotiations for a coalition government, the liberal party VVD and labour party PvdA agreed to increase the retirement age for the state pension AOW from 65 to 66 in 2018, to be followed by an increase to 67 in 2021.

The increase is also to be achieved gradually - through yearly steps of one, two, three and four months - and is to start next year.

The parties said they had reached a compromise on the PvdA’s election promise of an increase to 66 in 2020 and to 67 in 2025, and the VVD’s pledge for a pensionable age of 67 in 2018.

In its election programme, the PvdA said it wanted to stick to last year’s Pensions Agreement between employers, workers and the government.

Last March, however, after the collapse of the previous government coalition, five political parties - excluding the PvdA - overruled the Pensions Agreement.

Under pressure from the European Commission to reduce the budget deficit, the parties then decided to an AOW age of 66 in 2019, to be followed by a further increase to 67 in 2023.

The VVD and PvdA said they were also negotiating transitional arrangements for pensioners - either already in a retirement scheme or soon to be in one - who had been unable to prepare for an AOW age increase.

In addition, employees between the ages of 61 and 65, who keep on working until they are 65.5, will be entitled to a financial bonus, allowing them to retire 1.5 years earlier without a financial drawback, the parties said.

The new tax-friendly savings scheme to encourage working longer - ‘vitality saving’, introduced as part of the Pensions Agreement, and scheduled to come into force in 2013 - will be scrapped, they added.

Topics