NETHERLANDS - The pension age in the Netherlands should be raised to ensure fiscal sustainability, according to a report from the Organisation for Economic Co-operation and Development (OECD).
However, it warned public spending on healthcare and pensions was projected to increase sharply in the next four decades, despite second pillar pensions being well funded.
While this trend should improve thereafter, it was not enough to avoid a spiral of debt accumulation, the OECD said.
"The age of eligibility to a state pension - 65 years - has been kept unchanged since the establishment of the scheme in 1957, even though life expectancy has increased by more than six years," the OECD said.
"Hence, although the current government has decided not to do so, eligibility to state pensions should be postponed in several pre-announced steps (for instance 67 years) over a reasonable transition period and then be kept in line with developments in life expectancy."
The OECD said model simulations of increasing the pension age had shown this would have favourable effects on both fiscal sustainability and labour participation.
It said first pillar pensions were relatively high in relation to average income (about 31% of average earnings) in comparison to neighbouring countries (about 22% of average earnings). This made the state pension a relatively costly scheme.
The report said: "Simulations…suggest that lowering the level of first pillar pensions would have a favourable effect on labour participation and would improve public finances substantially, although this would score low in terms of equity as some people would be worse off."
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