The Netherlands’ rejection of the European Union’s proposal to issue joint debt is a “missed opportunity” to tackle ageing populations and the pension crisis in the EU, according to APG head of international public affairs, Johan Barnard.

In a comment on APG’s website, Barnard cited a report from the Scientific Council for Government Policy (WRR) from September 2024 – European ageing in focus, dealing with pension budget risks – which stated that it is in the Netherlands’ interest to provide other member states with more assistance in tackling the ageing population and pension issues.

Barnard said: “The WRR warns that a scenario of rising deficits in other member states will automatically have cross-border consequences for the Netherlands, which will almost inevitably be negative. This is because inflation erodes the purchasing power of capital-funded pension benefits. For the WRR, this means that the outcome of discussions on ageing and pensions in other EU member states is also in the Dutch interest.”

His comments come at a time when EU member states are locked in negotiations with the European Commission (EC) to determine the EU budget for 2028-2034. The EC has proposed an amount of €2,000bn, considerably more than the €1,200bn for the current period. A significant part of this will be to bolster defence in the EU and accelerate the climate transition, for example.

The EC is looking into whether funding can be provided to member states for national reforms, for example, pensions, based on concrete results, known as performance-based payments. It has also proposed that in crises, it should be able to issue loans to member states that are short of capital to help them cope, something that the Netherlands is against.

Barnard highlighted how the EC believes that to boost economic growth, especially in member states where ageing and pensions are becoming an issue, investing in defence, the climate transition, innovation, start-ups and scale-ups is necessary to achieve this.

He believes that in this way, European money could act as a flywheel and could lead to additional investment opportunities for pension funds. “Precisely in those areas where we would already like to do more. With the additional growth, state financing of the first pillar will also become easier,” he said.

While the Dutch government is supportive of the investment plans, it does not want to see such an increase in the EU’s budget.

Barnard explained: “Outgoing Minister for Finance, Eelco Heijnen, is also sticking to this. And when it comes to the ageing population in other member states, they will have to raise the retirement age or possibly reduce benefits. However, these measures are obviously unpopular and are meeting with considerable resistance. You can see that in such member states, for example, in France, the deficits are still rising.”

However, he believes that the Netherlands should partially revise its frugal stance, but added that it is regrettable that the EC did not propose a ‘fairness instrument’ in its proposed multiannual budget to achieve such a fair result.

"I think it is less sensible for the Netherlands to make such a big deal of the absolute size of the EU budget. It would be better to create room for this. Thanks to its low national debt, the Netherlands can easily afford this,” Barnard said.

“However, this must be conditional on stricter rules for financing being applied throughout the budget. Clear and measurable results must be agreed upon and achieved by the member states before the Commission transfers the allocated funds to them."

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