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Dutch employers critical of portability plan

NETHERLANDS – Dutch employers organisation VNO-NCW has criticised the European Commission’s proposed directive on pensions portability – saying it could threaten the Dutch pension system.

The Commission unveiled its proposals on pensions portability last month and has already faced criticism from several quarters.

The proposed directive would give EU employees the basic right to take accrued pension benefits with them when they change jobs after a two-year vesting period. The Commission estimates that one out of three workers in the former EU-15 changes jobs every five years.

VNO-NCW has identified problems with the proposal’s clauses on indexation for deferreds and minimum entrance age for pension schemes. “It violates the right of employers and employees to making agreements on the conditions for additional pensions,” it added in statement.

According to VNO-NCW, the present wording of the directive threatens the Dutch pension system. “If the disputed clauses don’t disappear, the government should veto the decision making,” it said.

“Within the EU, the Netherlands has the best and most extensive system of additional pensions. It is not acceptable that it will be floored by an EU directive”, VNO-NCW stressed.

“A number of Dutch pension schemes have set a minimum entrance age of up to 25 years. This in order to prevent workers on short-term contracts building up negligible pension rights, which need to be administered until their retirement age,” it explained. The draft directive doesn’t allow a minimum age of over 21.

“Dutch pension funds usually include indexation clauses for deferreds, but they are subject to the financial feasibility,” said VNO-NCW. “Unconditional indexation for deferreds shouldn’t be a right.”

“The open end clause of the indexation of deferred pensions is an infringement of national legislation”, said the Dutch Association of Industry-wide Pension Funds in a provisional comment. It indicated it needed to have a closer examination of the directive.

“It is too early for heavy words,” said Jeroen Steenvoorden, director of the Foundation of Company Pension Funds, or OPF. “Although the issues could affect the whole Dutch system, we are still investigating the possible effects.”

The European Federation for Retirement Provision, or EFRP, shares the worries of the Dutch employers on indexation. “It might lead to a considerable costs increase, both for employers and employees”, said secretary general Chris Verhaegen. “The age issue will make pensions more expensive as well, although to a lesser extent.”

Representing 90% of the employment of the market sector, VNO-NCW is the largest employers organisation in the Netherlands.

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