NETHERLANDS - Employees who work beyond the official Dutch retirement age of 65 will receive an increase to their state pension AOW, according to a plan being considered by social affairs minister Piet Hein Donner.

To make working longer more attractive, Donner wants to grant an extra AOW benefit of 5% for every additional year, which is double the usual build up for AOW entitlement.

The minister will put his proposal to employer and employee representatives during the traditional spring consultations on April 23, but Donner believes the bonus be introduced from next year.

The average retirement age in the Netherlands is 62 at present so Donner's plan fits within the government's decision not to raise the official retirement age, but to focus instead on making working longer more attractive.

Part of the plan is to raise the labour participation rate of under 65s from the current 73% to 80%, in order to counter the financial effects of population ageing.

The government has already decided civil servants no longer have to retire at 65, and the large employers' organisation VNO-NCW has now welcomed Donner's initiative.

"The proposal fits within our philosophy on how to keep the AOW affordable," said Gerard Verheij, the organisation's pension secretary.

Verheij, who described the proposal as ‘creative and sympathetic', indicated he likes the non-mandatory character of Donner's plan.

Despite the positive stance of VNO-NCW, there are still some issues to be resolved so the organisation wants a clearer picture of Donner's plan.
"It is still unclear whether employees who keep on working must pay their AOW contributions, what their job security is and if they can be insured against medical expenses," said officials in an additional statement.
At present, employers cannot take out insurance against the financial implications of sick leave by the over 65s.

Union body CNV, meanwhile, says while it considers the minister's proposal ‘positive in principle', it is reluctant to comment.

"This is just a part of a whole package which could have other unwanted effects, such as the rise of the official retirement age over time," said a spokeswoman.

In the opinion of CNV officials, minister Donner would be better to focus on encouraging employees to continue working until the age of 65.

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