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Dutch PM speaks out against early retirement

NETHERLANDS - Dutch Prime Minister Jan Peter Balkenende has spoken out strongly against early retirement – adding that the new levensloop marks a crucial change of direction.

“We cannot accept that people in their 30s and 40s continued to contribute to generous early retirement schemes for people in their 50s,” he said in a speech at the launch of the Netspar pensions research network at the University of Tilburg.

He added: “Society should stop having to foot the bill for the poor maintenance and premature writing off of human capital.” A new form of solidarity was needed with a new balance between the rights and duties of different generations.

The generation in their 30s and 40s needed more attention than before, he urged. He pointed out that during their working career between “the ages of 30 and 55 the burden often rises sky high”.

About one third of Dutch pension costs are now spent on schemes for early retirement, Balkenende noted. “Sixty-one percent of people in the 55 to 65 age group don’t work at all.”

He said: “The introduction of a life-course savings scheme levensloop marks a crucial change of direction. The scheme represents a radical new approach. We are now longer on a train to nowhere. But on one that offers good future prospects.”

“Schemes that promote early retirement will be limited. Instead tax incentives will make it easier to combine work, care and study. With the life-course savings scheme we are back on the right track.

“How can we make sure that the scheme delivers optimum results in the future?

“Someone who makes full use of the scheme will be able to take a year’s time out three times during their working career while receiving 70% of their salary.

“But people first need to save. Suppose you start saving when you are 25 you can then take time out when you are 32, for instance if your first child is born. And then you will have to save again before taking more leave. For young families this is not always easy to plan.

“It should be attractive for people in their 30s to make use of the life-course savings scheme. And for people in their 50s to continue working longer in a way that meets their wishes.

“Why do we end our working career so suddenly when we reach a certain age? Why hasn’t a part time pension been introduced? Payment of part of our pension could be brought forward while we continue working longer – as was agreed with the social partners last autumn.

“We could work fewer hours, but until a later age. Even beyond the age of 65 if we want to. In other words those in work would take longer to stop working altogether. All of us would gain.

“I would call on employers and employees to think carefully about life course plans and to bear younger people in mind. You pledged to do so last autumn and now its up to you to fulfil your pledge. I cant help noticing that pay talks still focus heavily on early retirement while what is really needed is good life-course agreements.”

After his speech Balkenende engaged in a 45-minute unscripted debate, in English, with five Tilburg students who put a series of unseen pension related questions to him.

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