Dutch coalition partners VVD and D66 want to make pension savings voluntary for annual incomes above €60,000.
The two liberal parties, that currently form a coalition government with CDA and ChristenUnie, made their announcement shortly before parliamentary elections, scheduled for 15-17 March to be held in the Netherlands.
Their plan leaves it up to pension scheme members to decide whether they want to pay pension contributions above a €60,000 annual salary threshold. The measure would bring forward income tax receipts as pension contributions are exempt from income tax.
If approved, the government’s planning bureau CPB estimates about 20% of eligible workers will make use of it. This would bring in some €600m in additional tax receipts.
“Our plan fits in the direction we want to take towards greater freedom of choice in the pension system,” said VVD’s pensions spokesman, MP Roald van der Linde.
The VVD is currently leading in the polls as it is projected to take 42 out of parliament’s 150 seats. Junior coalition partner D66 is polling 15 seats, leaving the pair about 20 seats short of a majority.
While serving to free up cash in the pockets of higher earners in the short term, the proposal also means pension incomes would decrease. However, pension accumulation for salaries up until €60,000 per annum will remain compulsory.
This will guarantee sufficient minimum pensions, according to Van der Linde. Pension savings for salaries up until €112,000 per annum will remain exempted from income tax, he added.
Both parties also want to introduce the option of pension contribution holidays of up to five years. The VVD-version of this plan would bring in another €300m in additional tax income. Van der Linde believes the next government could introduce his plans relatively quickly, as part of the new pension law that is currently under review.
Compulsory pension for the self-employed
Left-wing opposition parties PvdA, SP and GroenLinks, in contrast, want to widen the scope of the pension system by making it compulsory for all workers to save for a private pension.
This would mainly affect the country’s one million self-employed workers, but also the growing number of employees that are not enrolled in a pension plan through their employer.
The three parties together account for approximately 40 seats in the polls. If these workers were to put 10% of their gross salaries into their pensions, this would reduce the government’s tax receipts by €1.2bn, according to the CPB.