Increasing Dutch retirement age by 2020 is 'too little too late'

NETHERLANDS - The increase of the Dutch state pension AOW age from 65 to 66 in 2020 is "too little and far too late" to counter the financial impact of an ageing population, according to Sweder van Wijnbergen, economist at Amsterdam University.

Van Wijnbergen - responding to the coalition agreement between liberal party VVD and the Christian Democrat party CDA, and supported by the anti-immigration Freedom Party (PVV) - said: "It is also very likely the new government will wait until 2019 before taking measures, rather than starting now with a gradual introduction."

Already in 2006, Professor Van Wijnbergen predicted the AOW would "explode" if the cabinet did not adjust its policy.

Lans Bovenberg, economist at Tilburg University, said the most damaging omission in the coalition agreement was a labour market policy to keep older workers active.

He said: "I'm afraid this will erode the support for a further increase of the AOW age in line with life expectancy."
 
He added that the tax-facilitation of additional pensions should already be introduced in 2012, rather than in 2013 as planned by the coalition.

The new 'tolerated government' will also merge the tax-friendly saving life course schemes 'levensloop' and 'spaarloon' into a new 'vitality' scheme, which will offer support for care duties, education, a part-time pension or the start of a company.

However, the new saving plan can no longer be used for early retirement, the coalition partners have decided.

The merger of both schemes is positive, as workers have been unable to participate in both schemes at the same moment until now, according to Bovenberg, adding that keeping the early retirement option as an extra choice would have been useful.

Agnes Jongerius, chair of the largest union FNV, said the coalition agreement was very diffuse and wondered when exactly the cabinet would raise the AOW age.

In contrast, employer organisations VNO-NCW, MKB Nederland and LTO Nederland have said they have faith in the cabinet and embraced the agreements on AOW and additional pensions of the social partners.

In June, the employers and employees agreed the AOW age would rise to 66 in 2020 and become flexible, meaning retirement at 65 will still be possible, but against a cut in benefits of 6.5%.

The social partners also agreed the retirement age for additional pensions will remain flexible and be linked to life expectancy, indicating that this is likely to lead to a rise to 67 in 2025.