NETHERLANDS - The Dutch government has increased its payments into the AOW first-pillar pension system by €1.4bn in 2005, according to official figures.
The move was aimed at countering possible increased AOW payments.
Total government expenses increased by 2.2% in 2005, reaching €32.9b, with AOW and other social security payments accounting for €26.6bn, said Statistics Netherlands (Centraal Bureau voor de Statistiek, or CBS).
According the CBS report, the increased government payments into the AOW scheme are a logical result of decisions taken by former governments.
In 1996, the Labour-Liberal government decided to introduce a maximum AOW premium for everybody younger than 65 with a salary.
To counter the gap between AOW subscriptions of employees and AOW payments to pensioners, the government will have to pay into the scheme itself.
According to the CBS, 20% of total AOW payments to pensioners is being paid by the government. Due to the fact that ageing will result in increased amounts of pensioners, the government payments into the scheme will increase substantially in the future.
The Social Security Bank, the official organisation which pays out AOW pensions, has stated that it has paid €23.4bn to 2.5m AOW pensioners in 2005.