The Dutch government must slow down the rate at which it plans to increase the state pension age, politicians have argued.
During a debate in parliament yesterday about the collapse of the negotiations around a new pensions agreement, all political parties concluded that the plan to raise the official retirement age in line with longevity from 2022 was not tenable.
Under the current arrangements, the retirement age for the Netherlands’ state pension – the AOW – is to rise from 65 in 2017 to 67 and three months in 2022. It will subsequently increase by one year for every year of additional improvement in life expectancy.
However, linking the AOW age to life expectancy angered trade unions, which argued that this would be too fast for workers in hard physical jobs. They have lobbied to freeze the AOW age at 66.
Dutch prime minister Mark Rutte, while acknowledging the overwhelming demand from political parties, contended that only a new government could alter the disputed policy.
“It would be too expensive and would cause a large shift on the budget that could only be agreed during the formation of a new government,” he said.
Rutte suggested that, during the recent negotiations, the cabinet had offered what unions and employers had drawn up in a draft agreement that leaked to the press in May.
The draft agreement at the time indicated that the social partners had opted for collective pension arrangements, offering fewer guarantees than the current DB plans but with more scope for indexation. However, it did not mention the unions’ demands related to AOW, the discount rate for liabilities, or pensions for self-employed workers.
Academics back up union concerns
Separately from the political debate, several experts on ageing have concluded that a solution must be found for workers in physically demanding jobs, as they were likely to experience fewer years of healthy retirement than those with other kinds of jobs.
At a meeting of pensions think-tank Netspar in Rotterdam, academics presented surveys showing that the difference in life expectancy between lower and higher educated workers was increasing.
“The question is whether the current rise of the state pension age is fair in this context,” said Dorly Deeg, professor of epidemiology and ageing at VUmc in Amsterdam.
She added that an increasing number of people aged between 65 and 75 were suffering from at least two chronic illnesses.
“The uniform rise of the AOW age is at odds with the consistent difference of life expectancy and healthy longevity between the lower and higher educated,” said Wilma Nusselder, senior researcher at Rotterdam’s Erasmus Medical Centre.
Several presentations highlighted that less educated people not only faced a lower life expectancy, but also usually lacked the financial means to retire earlier. Nusselder noted that the difference between lower and higher educated workers had also been observed in other countries.
Joop de Beer, researcher at the Dutch Demographic Institute (Nidi), suggested that the AOW age should rise by one month per year in order to prevent a continuing discussion on the issue.
Politicians demand more information
During the parliamentary debate, the Christian Democrats (CDA), the opposition left-wing green party GroenLinks, labour party PvdA and religious right-wing party SGP collectively filed a motion calling for the government to assess how healthy life expectancy was developing.
They also asked for alternative options for linking retirement and life expectancy, as well as how to finance them.
Prime minister Rutte said that discussions were not dead, but didn’t make clear how the process of pensions reform should be continued.
Wouter Koolmees, minister for social affairs, said the government would assess the situation and he would inform parliament of further developments in January.
Without agreement between the social partners on reform, cuts to pension payments remain possible for some schemes from 2020.
Both the party for the elderly, 50Plus, and GroenLinks announced that they would table bill to allow for a longer recovery period for pension funds, to provide the social partners additional leeway for drawing up a new reform plan.