NETHERLANDS - Self-employed individuals should be given the legal right to temporarily stay in the pension fund of their former employer so they may save for a pension, a Dutch academic expert has suggested.
The new Pension Act allows pension funds to offer ex-employees the right to extend their pension fund participation by 10 years, but this is not considered a proper solution as the tax benefits end after three years, Professor Gerry Dietvorst argued during a meeting of Netspar, the platform for pensions, ageing and retirement, yesterday.
That said, continuing members have to pay both the workers' and the employer's contributions, so few individuals are currently using the stay-put option, which is mainly offered by industry-wide schemes, Dietvorst pointed out.
"But temporarily continuing a partner pension is much cheaper, and is an attractive option for covering the partner's risk," he added.
There are between 400,000 and 600,000 self-employed workers (ZZP) in the Netherlands. Yet according to Professor Ton Wilthagen, 80% of them are not saving enough to cover for future expenses, and 75% would like to build up a pension.
Dietvorst argued that superannuation schemes offers these workers the best option for pensions saving at present because they can deduct 17% of the profit from their taxable income.
In his opinion, pension providers and lobby organisations should come up with proposals to accommodate ZZPs through collective contracts, or through the new premium pension institution (PPI), which is to come into force on 1 January 2010.
Dietvorst, who is also researcher at the CompetenceCentre for Pension Research of Tilburg University, claimed the legislator should remove the condition which requires ZZPs first must prove a looming pension shortfall.
Any abuse of such a scheme can be prevented by asking participants to state that they have not participated in a pension scheme nor have they reserved money through the tax-facilitated Fiscale Oudedags Reserve (FOR), explained Dietvorst.
The FOR should be ditched anyway, according to the fiscal expert, "because it is money for which the tax man merely grants a delay of payment". His opinion was shared by Erik Schouten, a colleague at insurer Aegon.
Both Dietvorst and Wilthagen also pleaded for a labour form-neutral pension system, with uniform fiscal treatment for everybody in the second and third pillar.