NETHERLANDS - The tax-friendly ‘levensloop', or life course, scheme should be changed into a fiscal scheme for loss of income, says a group of six experts including professor Lans Bovenberg of pensions platform Netspar.
In order to increase the popularity of the new levensloop, the tax discount on the eventual use of the levensloop balance and on the savings for the ‘spaarloon' scheme, should be replaced by a government contribution into the levensloop, the six argue.
"The spaarloon scheme should merge with the levensloop, with the wider purpose of covering loss of income," Bovenberg explained to IPE.
Levensloop enables workers finance unpaid interim leave for care or study in a tax-friendly way. Although it also provides for early retirement, it is meant to encourage employees to work longer. They can save up to 12% of their salary a year, up to a maximum of 210%.
Spaarloon allows workers to save up to €613 a year. Its purpose is to encourage saving. The balance can't be taken out during the first four years.
According to Bovenberg, who is one of the architects of the levensloop scheme, the uptake of the new levensloop is between 5% and 10% so far, whilst still over 50% of workers participate in spaarloon.
"The problem is that spaarloon and levensloop can't be used at the same time during a tax year. People tend to stay with the scheme they are already familiar with," he said.
The experts propose a maximum government contribution of €300, proportional to a worker's deposit into the levensloop account.
Moreover, the present tax discount during parental leave should be replaced by an extra government contribution into the levensloop at the birth of each child, they said.
According to the pensions experts, the employers should be allowed to contribute to their workers' levensloop scheme as well. An extension of the levensloop into a scheme for loss of income, should also provide for a participation by self-employed, they say.
A survey into merging the fiscal facilities of levensloop and individual pension saving schemes is necessary, they added.
Meanwhile, the liberal party VVD rejects raising the official retirement age of 65 as a way of financing the effects of ageing. The same goes for taxation of pensioners. The VVD prefers to encourage employees to keep on working until they are 65, it says in its election manifest.
Earlier, the Christian Democrat party CDA, indicated it doesn't want to change the state pension AOW. The labour party PvdA is pleading in favour of taxation of the AOW.