NETHERLANDS - Following a long and tendentious debate, the Dutch prepension plans have finally been approved by parliament, with the government now promising a new evaluation of pension funds in September 2005.
Social partners now have to be convinced to hasten their negotiations on an industrywide level and agree to changes in plan design, if pensionfunds are to make any kind of progress by September when the ministerwill decide if the industry is ready to implement all the changes to the pre-pension package on 1 January, 2006.
The last minute compromise was reached after a heated debate in the senate [upper house] which saw the Dutch social affairs minister Aart Jan de Geus come under 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 minister had rejected similar calls for a quarterly review when the bill was being debated in the lower house.
A Ministry of Finance spokesman said that the bill was passed with a majority of 66 votes out of a total of 75. Two parties voted against theproposal – the Groen Links (Green Left) with five seats and Socialistische Partij (Socialist Party) which has four seats in the upper house.
Jeroen Steenvoorden, director, Dutch Association of Company Pension Funds or the OPF, said: “We see this evaluation as an opportunity as well as a threat. We will now call on social partners to implement this new law as soon as possible.
“The question is if social partners don’t reach an agreement on an industry-wide basis and start implementing the changes to the new law before September by a huge majority then the minister will also notbe willing to delay the implementation date. So the whole review hinges on social partners agreeing to make the changes according to the newlaw. Hence, we still have all the implementation risks due to the short transition period.”
Steenvoorden said that there were some technical problems that have yet to be resolved. He said: “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 atleast be in line with EU laws.”
He cites three features in the law where the issue of discrimination may arise: unfunded early retirement plans will no longer be tax effective foremployees under the age of 55 at 1 January, 2005. Employees over 55 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 65, with 70% of the final pay.
Steenvoorden says foreigners and women, who take time off work, are not likely to 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 theworries,” 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 structuredby existing employer sponsored plans have changed.
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