NETHERLANDS - The Dutch coalition political parties have agreed to raise to official retirement age for the state pension AOW in two steps from 65 to 67 in 2025.

The government parties propose to raise the state pension age to 66 in 2020, allowing sufficient lead-in time for workers between the ages of 50 and 55 who, it was argued, may not sufficient time to prepare for the change.

At the same time, however, the parties also want to raise the retirement age for second pillar pensions in a single one step to 67 in 2020, a spokesman for one of the parties said.

From 2020, employees will have the option of retiring at 65 but face discounted benefits for doing so, with the exception of low earners who will receive a lower discount.

To prevent unemployed workers from ending up with a lower income should their unemployment benefits run out before they reach the state retirement age, the government parties - Christian Democrats of CDA, the labour party PvdA and the Christian rightwing party CU - want to introduce a new benefit scheme aimed at AOW level benefits.

The coalition has already agreed to put in place changes stating workers in physically hard jobs must be offered a less demanding job by their employers after 30 years.

The deal is significant progress as unions and employers failed to reach an alternative via the Social and Economic Council (SER) earlier this month to the initial cabinet proposal to raise the AOW by one month a year over the next 24 years to age 67.

Agnes Jongerius, chair of FNV, the large trade unions confederation, and an opponent of any rise of the AOW age, described the coalition proposal as "a monstrosity, which will cause misery to Dutch society for decades".

The employers' lobbying organisations VNB-NCW, MKB-Nederland and LTO Nederland said in a joint statement said they agreed with the proposals, and described them as ‘sensible and future-oriented'.

Employers said they saw the raising of the retirement age to 67 as "inevitable".

The Dutch cabinet will discuss the coalition parties' proposals today.

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