Landmark reform of €1.5 trillion pension system passes Tweede Kamer, heads to Senate
The Tweede Kamer voted on Thursday in support of a new set of pension reforms considered one of the most significant pieces of social legislation in the past few decades. Already earlier this week, the vote was expected to pass the lower House of Parliament, after a number of amendments were approved by a majority at the request of parties which were on the fence.
As a result, the law passed by a large 93-48 majority thanks to the backing of the coalition parties, which were joined by SGP, Volt, PvdA, and GroenLinks. Both of the latter parties were needed for passage through the Eerste Kamer, the Dutch Senate.
There was wide agreement that the current pension system was out of date. The bill is meant to make the system more flexible and in line with the current labor market trends by shifting the massive 1.4 to 1.5 trillion euros in pension assets from one collective pot to more individual pension funds. One goal is that young workers, including those on temporary and flexible contracts, can build up their pensions from a younger age and more rapidly. Additionally, pensions should be able to be indexed in line with inflation more readily if the investments perform well.
Concerns include a higher level of risk that the pension funds may now face. Additionally, politicians want guarantees that the transition to the new system will not damage the standing of middle-aged workers.
To win over PvdA and GroenLinks, the coalition compromised on three important amendments. Working people should be able to start building up a pension from the age of 18, instead of 21. A waiting period will be eliminated so temporary and flexible workers can immediately accrue their pension. Additionally, if the bill becomes a law, the Cabinet must quickly address the situation if it turns out that segments of the working population are not growing their pensions fast enough.
Pension minister Carola Schouten said she was pleased with the results. She called it the “most extensive” handling of a bill in her career. “And that's good, because the law has improved through all those debates."
To become a law, the measure may have to be quickly taken up in the Senate after the Christmas and New Year’s recess. The provincial elections in May will determine the composition of the Senate. Support for Prime Minister Mark Rutte’s VVD, the largest party, has fallen steadily since last July, as has support for the second largest party, D66, which is also in the coalition. Support for the CDA has also dropped off. Meanwhile, support for the PVV, BBB, and Ja21 has been rising, and both PvdA and GroenLinks seem to be trending more positively in polling over the last year.
