NETHERLANDS - Dutch workers who retire before the official retirement age of 65 with over €15,000 in pension benefits, would have to pay extra contributions for the state pension AOW, the new government suggested according to reports.

On the other hand, over 65s who keep on working, will get a tax reward, sources near the secret negotiations between the Christian Democrats CDA, the labour party PvdA and the small Christian-right party ChristenUnie have claimed.

The earlier people retire, the higher the levy reportedly will be. The AOW proposals are supposed to apply to workers who are reaching the official pension age as of January 1 2011.

The purported agreement is a compromise. Whilst the PvdA so far wanted to tax pensioners with a pension of over €15,000 for AOW, the CDA preferred people to continue working till at least 65.

Spokesmen of CDA and PvdA declined to confirm an agreement, referring to ‘necessary discussions on details within the respective parties'.

Major union FNV does not agree with the leaked plans. The planned taxation of the AOW was reportedly described as ‘madness' by board member Peter Gortzak.

On the other hand, union CNV voiced support. "It fits within the recommendations of the Social and Economic Council to keep as many able people working as possible. Moreover, it offers workers a choice on how to contribute to the AOW," its chairman Rene Paas commented.

It is assumed that the negotiations between the potential partners for a new government will be concluded within days.