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Even lowered pensions expectations 'still too high', VvV warns

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  • Even lowered pensions expectations 'still too high', VvV warns

NETHERLANDS – The expectations of workers both young and old in the Netherlands – even those who acknowledge that their pensions are too small – will still be too high if the tax-facilitated accrual rate is lowered to 1.75% a year, the Dutch Association of Insurers (VvV) has warned.

According to the commercial survey bureau GfK, which conducted an online survey of nearly 1,000 consumers on behalf of the VvV, Dutch employees between 18 and 35 years of age expect to receive 64% of their average salary at retirement.

According to the VvV, however, they would require 74% of their salaries.

Previous studies have suggested government proposals to decrease the yearly accrual rate from 2.25% to 1.75% will hit young people particularly hard, even if promised permanent compensation measures lift the new rate to 1.85%.

Dutch workers over 50 believe they will require 79% of their average salary for an adequate pension, yet the VvV estimates that they will receive on average no more than 69%.

Of the interviewed young employees, 79% said they were concerned their pension would be less than 50% of their average salary, while 76% of older workers said this would be a problem.

On average, both age groups expect to retire at 65.5, while less than 8% expect to keep on working until 70, GfK found.

However, 31% of the younger generation and 25% of older workers said they would need a part-time job after retirement.

The different generations agreed the government should not "economise" on pensions but rather focus on trimming the civil service and cutting back on Social Security, as well as on decreasing tax benefits for the interest on mortgages.

Nearly 70% of surveyed young workers said it made little sense for them to carry on working until the age of 72, assuming the Cabinet's plans on the retirement age are embraced by Parliament.

In a large advertisement in national news papers, the €292bn civil service scheme ABP and the unions FNV, CNV and MHP, as well as the VvV, called on Parliament to allow for a 2% pensions accrual to ensure young workers receive adequate pensions.

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