Negotiations over new Dutch pensions agreement collapse
Negotiations about a new pensions agreement in the Netherlands have collapsed amid recriminations between trade unions, employers and the government.
Following consultations with their memberships over the weekend, the unions presented a joint statement last night stating that the “lack of structural solutions” on most issues meant they would walk away from negotiations.
Stumbling blocks included the retirement age for the state pension (AOW), early retirement options for workers in hard physical jobs, accommodating self-employed workers into the pensions system, and the discount rate for liabilities. FNV, CNV and VCP, the country’s biggest unions, accused the cabinet of wanting to delay solving these problems.
“However, structural solutions were crucial to the unions,” said Han Busker, chair of the largest union, FNV.
The unions rejected an offer from the government to slow down the AOW age rise by two years, reaching 67 in 2024. The government had offered to set up a committee to look into the disputed mechanism that linked the state pension age to life expectancy increases after 2022, when the retirement age is set to rise to 67 and three months.
The CNV union added that they had been offered insufficient compensation for workers affected by changing the pensions accrual method, the costs of which have been estimated at €60bn. According to the VCP union, the proposal put to it meant workers had to fully bear the risk of the transition plan not working.
Tuur Elzinga, the FNV’s trustee for pensions, said that government representatives hadn’t offered any proposals for bringing self-employed workers – also known as zzp’ers – into the pension system.
However, the cabinet and employers were united in their opinion that there had been a good offer, with prime minister Mark Rutte claiming that the cabinet’s proposals had gone “much further than the unions had ever expected”.
Second pillar changes
Avoiding benefit cuts would have been possible by changing legislation in anticipation of the new system coming into force. The negotiating parties had allegedly reached a broad agreement on a contract for a target pension income – to be agreed between workers and employers – before the talks collapsed.
Under this concept, pension funds would not have to keep a financial buffer. Under the current system, which includes a buffer requirement, pension payments must be cut if a scheme’s funding remains below the required minimum coverage ratio of 104.3%.
Largely as a result of the market downturn in October, funding of four of the largest Dutch pension funds dropped to 101% on average. This increased the likelihood of benefit reductions in 2020 at the metal industry schemes PMT and PME.
Hans de Boer, chairman of employer organisation VNO-NCW, said the position of the unions was “incomprehensible”. In his opinion, the content of the deal was not the problem, but the union’s members.
Marc Calon, chairman of LTO, the lobbying organisation for the agricultural sector, echoed that the government had gone a “long way”.
The FNV’s Elzinga described the government’s offer – allegedly worth €7bn – as “coming out of its members’ own pockets” , as it would come at the expense of the budget of the ministry of Social Affairs.
The unions said they would now consult their members again. Rutte said that the government would also discuss the situation, adding that he was open to further discussions.