NETHERLANDS - Social partners see new possibilities for an agreement on pensions, in the wake of the collapsed Dutch coalition government. At a seminar organised by pension manager APG last Friday, employer and employee representatives indicated they were open to talks on both the retirement age for the ‘first pillar' state pension, AOW, and on pension reforms in the second pillar.

Bernard Wientjes, chairman of the body for Dutch employers, VNO-NCW, has extended an invitation to his "union friends" to hammer out an agreement after earlier talks failed to yield results. "We should be able to resolve this together, before we have a new government," he said.

Wientjes suggested the retirement age, not just for state pensions but also for work-related second pillar pensions, should be linked to life expectancy. Without such a measure to control cost, the second pillar pensions system will become unsustainable, he suggested.

"We believe that the rising life expectancy should be accounted for in the system. If a longer life is automatically translated into an extended career, this would solve about half of the problems," said Wientjes.

Of course, special provisions should be made for people with hard labour jobs, according to Wientjes, but this does not require bureaucratic rules and regulations, as the outgoing Cabinet had wanted. He suggested a solution should instead be found in a generous transition period and decentralised agreements for different industries.

In addition, Wientjes believes that "it is unavoidable that we will have to let go of the certainty of a pension amounting to 70% of final salary." He proposed the work-related pensions could be split into one ‘certain' and an ‘uncertain' pots, the latter of which is not guaranteed, "because otherwise, we will never see our way out of trouble."

Such a split should, however, be handled with utmost care, he added, "particularly on the ground floor of the salary building, where people get by with just a small work-related pension. The lower the salary, the higher the certainty that we must offer," he suggested.

Agnes Jongerius, chair of labour union FNV, said she "appreciated the extended hand" offered by Wientjes' organisation, and added: "I am assuming that both the proposed legislation regarding the state pension and legislation regarding the ‘Witteveen' framework [the fiscal framework for second pillar pensions] will be declared controversial, now that the coalition has collapsed. This offers new opportunities," she claimed.

Those opportunities concern the second pension pillar, for instance, as she noted: "Now that the proposed limitations to the Witteveen framework are off the agenda, an important obstacle to negotiations regarding work-related pensions has been removed."

Jongerius has been strongly opposed to the intended limitation of the Witteveen framework, as it would limit pre-tax pension savings. According to FNV, the cost savings from such a limitation would only yield benefits for employers.

But Wientjes promised that employers are willing to give certain cost savings back to the pensions system.

"If we could raise the pension age somewhat earlier than originally planned - say, in 2015 rather than 2020 - this would mean that pension contributions could be lowered earlier," said Wientjes. "This would yield savings of about €3.5bn. We are prepared to plough these savings back into the pension funds."

Jongerius suggested the pension age, both for the state pension and for work-related pensions, should be made flexible, and allow people the choice of retiring at any point between age 65 and 70 by giving those who extend their working years higher pension benefits in return.

In addition, the state pension AOW should be indexed to earned wages to ensure that the pre-tax AOW system no longer resembles a "melting polar ice cap," she added. According to Jongerius, this could be achieved without higher costs and "in fact, this would actually stabilise costs".

Jongerius, as chairman of the FNV, argued first and second pillar pensions cannot be treated in isolation but should be seen "communicating vessels".

"If the first pillar takes on the characteristics of a melting polar ice cap, the pressure on the second pillar rises until it reaches a breaking point," she said.

She agreed with Wientjes that social partners should agree on a solution for the second pillar before the country has a new Cabinet, but said as far as the first pillar is concerned, the responsibility should be placed squarely with the government.

"The government is responsible for stabilising the melting ice cap of the first pillar. Social partners, however, should take charge of building a solid, generation-proof second pensions pillar. We should not wait for a new Cabinet to do this," said Jongerius.

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