Dutch unions, employers and the Government have agreed upon a new pension contract, despite continuing resistance of the biggest union. The state pension age will go up to 66 in 2020 and to 67 in 2025, while the state pension will increase each year at 0.6% plus inflation from 2013 onwards.

The state pension age will rise with longevity and is therefore expected to rise to 67 in 2025. Individuals can still choose to retire early, but they will have to hand in 6.5% of their state pension. From 2020 onwards there will be an extra annual senior tax discount of 300 euros for those on lower incomes.

The reforms are intended to better equip the pension system against longevity and unstable financial markets. It is also expected it will save €4 billion for the Government.

In future, employers and unions will be able to decide for each pension fund what the best balance is between investment risk and being able to give guarantees about the height of the pension. Premiums paid by employees and employers will in principle not increase further.

President of employer organisation VNO-NCW Bernard Wientjes said that the new contract does not give guarantees about the height of occupational pensions. In the new agreement, employers are not obliged to top up pension pots if another crisis takes place. However, Wientjes added that “employers will have to pay their premium, also in prosperous times, so there will be no more premium discounts or premium holidays”.

Agnes Jongerius, president of umbrella organisation for unions FNV, said she was pleased with the new contract, although she admitted it is not perfect. The members of the unions will still need to approve the new contract, which means the largest member of FNV, FNV Bondgenoten, can still reject the agreement.

Bondgenoten believes too many risks are being given to employees and pensioners, while the other parties insist risks are being spread over several years. Bondgenoten represents about half a million employees from FNV’s 1.4 million members.

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