Legislative proposal to amend the General Old Age Pensions Act and the Wages and Salaries Tax Act 1964 in connection with the change in the link between the state pension age and the standard retirement age with the increase in life expectancy (change in the age of the state pension link). The bill provides for an amendment to the General Old Age Pensions Act (AOW), in order to implement the agreements made by the government with the social partners in the Pension Agreement concluded on 5 June 2019. As a result, the state pension age from 2025 will not increase one-on-one with the development of (remaining) life expectancy, but by 2/3 of a year increase in life expectancy. In the opinion of the Cabinet, this creates a more balanced relationship between the profit in life expectancy and the age at which the entitlement to a retirement pension arises under the AOW.
The Explanatory Memorandum to the bill states that the adjustment of the link between the state pension age and life expectancy is important in order to maintain support for the public pension system. With the one-to-one link of the AOW age to life expectancy as included in the Increase in the AOW and Standard Retirement Age Act, every extra year of life expectancy is fully translated into a higher AOW age. With this partial link, the Cabinet aims for a balanced relationship between the length of working life and the length of the pension for current and future generations, for which there seems to be more support. By already submitting the legislative proposal, it can be ensured that citizens who will reach the state pension age in the coming years are provided with timely certainty about the commencement date of their state pension. This certainty is important so that citizens can prepare in time for their retirement. The envisaged amendment to the law offers those people clarity and certainty. This is also important because people can choose their retirement date for the employment conditional pension and that the retirement date is not the AOW date as standard.
According to the Explanatory Memorandum the clarity about the AOW date is also important for the threshold exemption for early retirement schemes (RVU) agreed in the pension agreement, to be introduced on 1 January 2021. This measure allows for early retirement in the 36 months before the AOW date.
|
NAZALI TAX & LEGAL |