NETHERLANDS - Following a heated debate in the senate, the Dutch social affairs minister Aart Jan de Geus promised an evaluation of pension funds in September 2005, with a view to deciding if the industry was ready to implement all the changes to the pre-pension package on 1 January, 2006.
The minister agreed to the compromise after pressure from other senate colleagues. Pension funds have long been arguing for a longer transition period, claiming that the one year transition period was far too short. The final vote will take place on Tuesday.
The minister had rejected similar calls for a quarterly review when the bill was being debated in the lower house. Jeroen Steenvoorden (pictured), director, Dutch Association of Pension Funds or the OPF, said: “There are still some technical problems that are not yet resolved. One is the issue of discrimination and the possibility that the law may contravene EU legislation on this matter. Our argument is that if the government is issuing new laws, then it should at least be in line with EU laws.”
Steenvoorden cites three features in the law where the issue if discrimination may arise: unfunded early retirement plans will no longer be tax effective for employees under age 55 at 1 January, 2005. Employees over 55 years are, however, entitled to tax incentives.
The new lifestyle plan or the levensloop allows those in the age bracket of 50-54 to save extra and thirdly, the law permits those who have put in 40 years of service to retire at the age of 65, with 70% of the final pay. Steenvoorden says foreigners and women may not qualify for this.
“We are saying that if pension funds and social partners implement all the changes in the current form, then there is a potential danger of discrimination and that is one of the worries,” he added.
The new law aims to remove the fiscal incentives of early retirement (before 65) from 1 January, 2005. While early retirement will still remain possible, the extent to which this can be financed and structured by existing employer sponsored plans have changed.
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