NETHERLANDS - Chemical company Akzo Nobel is the first company to abolish the collective prepension scheme for its Dutch employees. Instead they can save individually for long-term leave via the new ‘levensloop’ scheme, which still will allow retirement at 62.
The decision is a result of a new Collective Labour Agreement(CAO), between the employer and the trade unions. The CAO will apply for three years, starting in 2004.
The core of the new agreement is the new ‘levensloop’, or life course scheme. It does not only cover saving for early retirement, but also for long-term leave, for example, for study or parental leave.
The Akzo Nobel employees have agreed to give up three days leave. The company will contribute 1% of pay to the levensloop scheme. Although the company’s official retirement age has been raised to 65, employees who are born before 1953 can still retire at 62, with 80% of their final salary.
Employees of 52 and younger can still stop working before 65, but they need to save for it. The youngest will need to save relatively the most, by setting aside 4% of their salaries.
In an effort to discourage early retirement, the Dutch government has made saving for prepension more difficult by removing the tax advantage. The unions are trying to restore this and make the pension age flexible within new CAOs. Employees could retire at 62, having an income of 70% of their average salaries. If they retire later, they get a bigger pension.
Meanwhile, the levensloop, which will come into force on January 1, does not seem to have developed into an instrument for negotiations yet. “Employees are considering the scheme as complicated and tend to prefer an ordinary prepension, or a more profitable old-age pension”, writes the magazine Salaris Rendement.
Employers fear their employees will take their leave when it does not suit the company. On the other hand employees do not have a right of cashing their tax-free savings and might invest it in their old-age pension, it adds.
According to Peter Kooiman of the national planning agency CPB, the levensloop is hardly attractive for the purpose it has been designed for: taking interim leave of not longer than a year. “The scheme is only of interest to people who are saving for early retirement”, he stated in Dutch daily Het Financieele Dagblad.