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Trade union issues ultimatum on Dutch pension reform

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The Netherlands’ largest trade union has threatened to stop co-operating with the government over pension system reform if it proceeds with a scheduled increase in the state pension age.

FNV has said that, if the government proceeded with its plan raise the retirement age for the state pension (AOW) to 66 years and eight months, it would walk out of pensions reform negotiations.

The union’s negotiator Tuur Elzinga said FNV had urged the government to take a decision in the coming weeks, according to financial newspaper FD. On the union’s website it said the government had until 1 July to respond.

FNV wants the AOW age to be frozen at 66, whereas the government has already decided on a gradual rise from 65 years in 2013 to 67 years and three months in 2022. After then, any further increases will be linked to longevity improvements.

The current retirement age for the AOW is 66 plus four months.

Tuur Elzinga, FNV

Tuur Elzinga, FNV

In the opinion of the unions, the planned rise is too fast, in particular for workers in physically demanding jobs. 

However, fixing the AOW age at 66 would be expensive and the government has not shown any willingness to set aside money for this purpose.

During the past few weeks there have been exploratory discussions between the government, employers and unions about the resumption of negotiations for pensions reform, according to the FD. Negotiations collapsed in November, in part because of disagreements over the AOW age.

Elzinga said the union would continue with its industrial action if the cabinet ignored its demand.

Embrace government reforms, pension sector told

Dutch parliament buildings in the Hague, the Netherlands

Dutch parliament buildings in the Hague, the Netherlands

Despite the unions’ reticence, social partners and pensions sector have been encouraged to embrace the Dutch government’s framework for pensions reform.

Jacqueline Lommen, pension strategist at State Street Global Advisors (SSGA), said a 10-point plan presented by social affairs minister Wouter Koolmees earlier this year contained the ingredients to satisfy pension fund participants and pensioners.

At a symposium hosted by Dutch pensions magazine Pensioen, Bestuur & Management in Amsterdam last week, Lommen cited a State Street survey of 10,000 participants in six European countries – including the UK, Sweden and Italy – as well as Australia and the US.

The study showed that early and sufficient pensions saving, clarity about its progress and future benefits were main contributors to people’s ‘pension happiness’, she said.

Other important factors were a sense of individual responsibility through a personal pension account as well as options for tailor-made solutions, Lommen said.

Dutch participants appeared to be almost the most pessimistic about their future financial position after retirement, and the least informed about their choice options for contributions, benefits and retirement age, SSGA found.

Lommen said the outcome was “distressing, as the Netherlands does many things right”, explaining that the government’s framework had almost bridged the gap between increasingly unaffordable defined benefit plans and flexible forms of defined contribution.

“There are already four different benefits arrangements possible under DC, easing implementation,” she said.

In Lommen’s opinion, the core of the government’s proposals shouldn’t be dismissed as merely “individual pension pots”.

“It is about the possibility to virtually divide a collective pension pot across individual assets for tailor-made implementation,” she argued.

Dutch unions oppose the concept of individual pension pots, and want to stick to the traditional collective approach to saving and risk sharing.

Lommen said the cabinet’s proposals for individual pension pots were aligned to the unions’ demands.

Highlighting other advantages of the Dutch pensions system, Lommen said the Netherlands was the only country with mandatory lifelong benefits where the “mortality gain” benefited the remaining participants, rather than disappearing to the heirs.

She also emphasised that all energy put into pension reform came at the expense of other promising innovations, such as the development of apps and pension planners as well as solutions for part-time retirement.

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  • Dutch Parliament buildings in the Hague, the Netherlands

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