A solution needs to be found for the group of early retirees who have fallen financial victims to the raising of the qualification age for the state pension (AOW). This is the opinion of Gijsbert Vonk, Professor of Social Security Law at the University of Groningen. He thinks the Dutch trade union federation FNV is right to insist on transitional regulations for this group of people. According to Vonk, good transitional regulations would soften the blow significantly.
The qualification age for the state pension was raised by a month on 1 January this year by the Rutte I cabinet – it is now 65 and 1 month. Employees who have taken early retirement will thus qualify for the state pension a month later. Next year another month will be added, until the qualification age for the state pension reaches 67 in 2023. People who stopped working before they reached 65 will thus be confronted with a financial gap in the next few years. The cabinet’s measure will affect about 10,000 people this year, FNV has calculated. The cabinet is of the opinion that they can cover the costs of the extra month without the state pension themselves. Although the most recent coalition agreement for the Rutte II cabinet promised transitional arrangements for low-income workers, four FNV unions are furious about what they consider ‘theft’ of accumulated rights. The unions want the courts to force the government to ‘repair’ the AOW gap.
Professor Vonk thinks that the unions are quite right to insist on transitional arrangements. ‘Many of those now affected had to stop working before they turned 65 due to job-related early retirement. They include those who had very heavy physical jobs. They had no choice, and are now being confronted by the negative consequences of this political measure.’ According to Vonk, the increase in the AOW qualification age is particularly bitter for these people because anything they earn on the side will be deducted from their early retirement benefits and so they can’t even take a job. The unions state that this is the reason behind hundreds of firefighters requesting to be taken back into service so that they can cover that month.
Vonk says that the cabinet would have done better to follow the German example. Years ago the Schröder government decided to raise the retirement age. That measure, whereby the retirement age also went up by a month a year, was recently introduced after a five-year delay. ‘Everyone had more than enough time to prepare’, says Vonk. ‘By so doing, the way they introduced it in Germany approached the optimum mix of postponed effect and gradualness.’ In the Netherlands, the increase was only announced last September. ‘It would have been more elegant to have taken this group more into account’, thinks Vonk.
Incidentally, the Rutte I AOW increase already included a sort of transitional regulation. Retirees can request an advance from the SVB (Sociale Verzekeringsbank, Social Insurance Bank). That amount then needs to be repaid within six months. ‘It would be a good idea to keep this regulation in place if the cabinet again comes with plans for new transitional regulations’, thinks Vonk.
Although Vonk understands the anger of the unions, he does not expect them to win the court case. ‘The AOW may well be a protected proprietary right according to the European human rights convention, but the State is allowed to dispossess people unless an extraordinary burden is being laid on the shoulders of a certain group. This is not the case here. The burden for early retirees is mild. Although they’ve only had a short time to prepare financially, they only need to cover a month.’ In addition, emphasizes Vonk, according to the most recent coalition agreement for Rutte II, those on low incomes will be spared; according to this agreement early retirees who earn less than 150% of the minimum wage will receive the state pension as soon as they turn 65.
‘Let’s put it all into perspective’, says Vonk. ‘In many other European countries the changes to pensions have been much more sweeping. In some cases the pensions have been reduced by 15% and early retirement schemes have been completely abolished.’ Raising the retirement age was unavoidable in the Netherlands, too, but the pain is much less, emphasizes Vonk. ‘What’s important is to spread the burden evenly. That is the case in our country up to a reasonable point. Young, old, and early retirees faced with a pension gap are all contributing. No-one likes it when money is taken away from them. But the AOW payments are not mine or yours, they are ours. And someone has to bear the burden.’
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