NETHERLANDS - Dutch citizens will be given the opportunity to delay receiving their state pension AOW for up to five years, in return for a higher benefit payout.
Achmed Aboutaleb, Secretary of State, has put forward a bill to parliament suggesting the official retirement age of 65 would not have to be the definite end of people's working lives under such a move, so retirement can be based on their physical ability and financial position.
His proposal also contains the option of receiving AOW fully or in part after 65, to allow people to stop working gradually.
The bill is in line with the government's aim to increase the labour participation of people between the ages of 60 and 65, as well as to stimulate working beyond 65 which should become the normal, Aboutaleb has suggested.
Besides the relative rise of a delayed AOW payout, workers would also benefit from the existing exemption for over-65s of AOW contributions and premiums for employees' insurances, the State Secretary argued.
The disposable income of a worker with an average salary would rise by approximately 25%, he indicated.
"By postponing the pension while continuing working after 65, as well as spreading the delayed pension over the rest of his life, a worker needs to pay less tax and premiums on balance," Aboutaleb added.
Social Affairs' minister Piet Hein Donner said earlier this year the government's policy is to prevent raising the official retirement age, while responding to proposals of the Committee Labour Participation.
This committee - also known as the ‘Commissie Bakker' - suggested the retirement age be gradually raised to 67 between 2016 and 2040.
In the opinion of Professor Lans Bovenberg of Netspar, the knowledge network for ageing and retirement, the government should also follow the proposal of the Commissie Bakker.
"In order to keep the pay-as-you-go funded AOW affordable, such measure is inevitable in the long run," Bovenberg commented to IPE.
Elsewhere, the combined assets of Dutch investment funds decreased by 8%, or €6.4bn, during the third quarter, following a lower valuation and withdrawals by investors, pensions regulator De Nederlandsche Bank has reported.
Equity was the worst hit asset class with a loss on investments of 11%, it said.
Along with a move of funds to Luxembourg, the combined assets of investment funds also dropped to €71.7bn, which is a decrease of 28% over the past five quarters, according to DNB.
The combined equity portfolios of the funds lost 34% of their value in the same period, it added.
Property portfolios decreased by 1% in the third quarter, mainly because lower demand for property following tighter credit conditions, the pension supervisor pointed out.
That said, the combined value of fixed-income investments showed a positive result by yielding almost 1%, "possibly because of a higher valuation of government bonds which have become increasing popular", DNB suggested.
The supervisor said the combined fixed income portfolios of investment funds have decreased by 19% since the start of the credit crunch.