Dutch elections: An unclear picture of pension reform

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Mariska van der Westen, editor of IPE sister publication IPNederland, explores what the results of the Dutch election might mean for pension reform.

In a surprise move, Dutch voters have charged the conservative VVD and the Labour Party with the vexing task of finding sufficient common ground to form a new Dutch government. In an election that defied recent polls, voters abandoned smaller parties en masse in favour of either conservatives or labour, boosting the number of house seats both can now claim, and setting up the two staunch political opponents to become governing allies.

The VVD, led by prime minister Mark Rutte, won the elections with a seat tally of 41 - gaining 11 seats in parliament - while the Labour Party gained nine seats for a total of 39.

As the Conservatives and Labour saw their numbers swell, other parties suffered surprising losses, with the Freedom Party of controversial politician Geert Wilders losing nine seats. The Socialist Party, which until recently had looked to be in a neck-and-neck race with VVD, ended up with 15 seats, while the Christian Democrats (CDA) lost eight seats to end up with 13 seats. D66 gained two seats and now will hold 12 seats in parliament. The Green Left party was left reeling, as it had to give up seven of its original 10 seats.

Considering the election results, it would seem likely for VVD and PvdA to form a coalition, possibly, though not necessarily, with one or two smaller parties. The two parties will not have an easy task trying to find common ground, considering the chasm between their conservative and centre-left views.

Both parties are pro-Europe but otherwise differ on most everything ranging from fiscal discipline to healthcare financing. With regard to pensions, the views of VVD and Labour are no less divergent. Labour supports the original 'pension agreement' reached last year, which provides for an increase in pensionable age to 66 by 2020 and 67 by 2025. VVD prefers a much faster increase to 67 by 2018.

CDA and D66, both possible coalition partners, are somewhere in the middle, targeting a rise of the pensionable age to 67 by 2020 and 2021, respectively.

VVD is known for questioning mandatory participation, one of the foundations of the Dutch compulsory pensions system, with prominent party officials such as Stef Blok arguing to abolish, or at least limit, compulsory participation.

Labour, on the contrary, has stressed the importance of maintaining what it has called "compulsory solidarity" as one of the key strengths of the Dutch system.

The differences between the two parties came to the fore time and again over the past year in parliamentary debates regarding the planned overhaul of the pensions system, with Conservatives pushing for reforms while Labour insisted on protective measures for older workers and low wage earners.

To form any kind of viable government, it seems VVD and PvdA will have to reconcile their views. Just how much of a challenge this might be may be seen from the negotiations preceding the Dutch pensions agreement, which pitted VVD's minister Henk Kamp against the unions, traditionally Labour's electoral base.

Eventually and after much wrangling, the pensions agreement did get signed - which goes to show that even uneasy bedfellows can come to an understanding. It is to be hoped that this is where the comparison ends. After all, the pension deal was short-lived.