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Netherlands: Pensionable Age Extended

(May 13, 2011) The Council of Ministers of the Netherlands adopted a proposal on April 29, 2011, to raise the official retirement age to 66 in 2020; at present it is 65. It is estimated that the move would save the government about €700 million (about US$1 billion). Under an informal accord reached between employers and labor unions in 2010, the pensionable age would be linked to average life expectancy. By the year 2025, that age would be 67; by 2040, according to the Dutch Minister of Social Affairs and Employment, Henk Kamp, it would be 68. (René Offermanns, Increase of Pensionable Age from 65 to 66 Proposed, TAX NEWS SERVICE (May 10, 2011), International Bureau of Fiscal Documentation (IBFD) online subscription database; Dutch Retirement 'at 68 by 2040,' RADIO NETHERLANDS WORLDWIDE (Apr. 20, 2011).)

Reportedly, “[t]he impetus for the move is Holland's aging population and increased longevity. Current government population projections indicate that the present ratio of four workers for each pensioner in the Netherlands is expected to decline to two workers for each pensioner by 2040.” (Netherlands Cabinet Endorses Proposal to Raise Retirement Age, AGING WORKFORCE NEWS (May 4, 2011).)

In addition, the Council of Ministers proposed increasing the pension accrual period from 35 years to 40, effective January 1, 2013. The annual accrual rate for a final pay system (a plan based on a person's final salary) would be 1.75%, down from 2%; for a career-average wage system (a plan based on conditional, indexed average pay), the rate would be 2%, down from 2.25%. Pension rights that have already accrued would remain unchanged. (Offermanns, supra; The Old Age Pension System in the Netherlands (June 2008); The Principles of the Dutch Pension System: The Problems We Are Facing, A Challenge for Trade Unions, Public Services International website (Nov. 14, 2008); see also Wendy Zeldin, Netherlands: Retirement Age to Rise, GLOBAL LEGAL MONITOR (Dec. 7, 2009).)