PGGM welcomes last-minute pension deal
NETHERLANDS - PGGM, the 57 billion-euro pension fund for healthcare and social workers in the Netherlands, has welcomed a last-minute welfare reform deal struck between the Dutch government and its social partners at the weekend.
In a statement, PGGM chairman Karel Noordzij said he was “pleased" that Dutch workers would keep the opportunity to retire early. The fund, which looks after the pensions of two million people, called Friday’s agreement a “sensible move”.
The Dutch cabinet, trade unions and employers’ associations reached an agreement after four hours of talks late on Friday night. The government’s initial plans included raising the retirement age, making earlier retirement harder to achieve, and freezing both civil service salaries and the minimum wage.
Although the retirement age proposals were abandoned, the cabinet’s plans to scrap tax breaks for VUT and pre-pension premiums in 2006 (with the exception of those who are 55 years of age or older on 1 January 2005) were maintained in the Friday agreement.
As an alternative for VUT and pre-pension, the government is to introduce a voluntary lifestyle savings scheme (or ‘levensloop’), in which Dutch workers will be allowed to save up to 2.1 times of their annual wages (instead of the initially proposed 1.5 times). The new scheme allows workers to retire three years before the official retirement age of 65.
Noordzij further welcomed the decision to allow the pension funds to operate the lifestyle savings scheme. “This will lead to advantages for both employers and employees: higher returns and lower costs,” he said.
PGGM asked the government to delay the introduction of the scheme by a year, to 2007, because it needs more time to bring its administrative systems in line with the new arrangements.
In a letter to the Dutch parliament, PGGM had previously warned that lifestyle savings schemes operated on an individual basis would make them twice as expensive for participants as the existing prepension arrangements.
Friday’s deal came after months of workers’ unrest in the Netherlands, culminating in mass demonstrations, protest rallies and a general transport strike last month.
Union bosses were promising a ‘long, hot autumn’ as the government tried to push through austerity measures to cut the cost of the country's ageing population.
The Dutch centre-right government has warned the country’s welfare state is unsustainable in its current form, particularly in light of the number of people over 65 in the Netherlands expected to double by 2040.