After negotiating for years, no pension deal is yet in sight

Edition 28 December 2018, by Johannes Visser

Talks between employers’ organizations and workers’ unions on a new pension system have crashed, after seven years of longdrawn- out negotiations. Prime Minister Mark Rutte had joined the talks four times during the fi nal stage, and the big prize was in sight. But then the unions FNV, CNV and VCP pulled the plug, resisting calls to raise the retirement age and demanding other concessions that could not be fulfi lled.

Rutte said he was “extremely disappointed” that the negotiations failed, considering that a seven billion euro package deal was made available to prepare the country for the next fi fty years. He also stated that the government had previously made farreaching compromises to the FNV, decoupling the retirement age from life expectancy. Calling the turn of events ‘horrible’ and blaming ‘a lack of leadership’ from the unions, he said he does not expect to reach a deal before the next government will take over.

Han Busker, chairman of the Netherlands’ largest union FNV also expressed ‘extreme disappointment’ that the parties involved were unable to meet the high expectations for a new pension system. He emphasized that the union did try to fi nd structural solutions for the problems the Dutch pension system is facing, like the rapidly aging population and the pension funds’ longterm budget challenges. He too didn’t think a deal would be possible under the current government. “We want to make sure we have a good pension and proper old-age arrangements for all.”

Retirement age

The main reason for the talks to collapse was the future age at which one can retire from work. The government intended to tie the retirement age to the average life expectancy, which continues to rise, from 2022 onward. The Dutch retirement age is now 66 years and will be 67 in 2021. When the Dutch general old age pensions (AOW) for those reaching age 65 went into effect in 1956, life expectancy stood at 67. Today it is over 80. The unions previously agreed to raising the retirement age from 2021, but the FNV wants a rise by six months instead of one year.

The price tag would be 6 billion dollars, which is too high for the government and the Netherlands’ largest employer group, VNO-NCW. However, as the government does not pay out the pensions but only sets the rules, it is the pension funds that manage (and invest) the old age contributions that employees and employers pay together. To get out of this Dutch version of a Mexican standoff, Rutte’s government proposed to decouple the retirement age and make it the next government’s problem, but the unions didn’t fall for it. Over the past seven years the negotiation partners had already agreed on the most important topics, like a more equal system for young people and no reduction in current pensions. But other themes proved a bridge too far: a pension solution for the self-employed continues to be tricky, as is calculating how much money exactly will be available for future pension payments. Another intractable issue is posed by people with physically demanding jobs. The unions want them to be able to retire earlier, but the government isn’t moving.

So now what?

Considering demographic trends, all parties have an interest in reforming the Dutch pension system. All agree that a solution for one of to the country’s largest problems should urgently be found. But talks are not likely to resume any time soon, as trust between the parties has sunk to a new low and all stakeholders are reorienting themselves for the near future. The FNV has announced new campaigns in the next couple of months, leading up to the elections for the provincial councils in March of next year. In order to put pressure on the government and employers’ groups to renegotiate better pension arrangements, the union will urge its members to go on strike more often and more fi rmly. These campaigns include ceasing work for a symbolic 66 minutes, referring to the retirement age of 66. Unions like those of the Rotterdam harbor, the police and the healthcare, construction and heavy metals sectors are considering whether to join.

Over the past couple of years, union membership was trending downward in the Netherlands, and many were predicting their imminent demise. But as the ongoing ‘yellow vest’ protests across Western Europe demonstrate, there is still an activist streak among the population, urging them to fi ght for better conditions in their day-today lives. The government had better take note.