NETHERLANDS – The Dutch government says the effective age of retirement should rise as a result of reform to the social security system’s pre-pension arrangements.

And it says that reform to social insurance will help to curb demographic change.

“For one, the reforms in the social insurance sector will help to counter demographic developments by raising participation rates,” the Finance Ministry said in the new version of its 2001-2007 Stability Programme.

“In addition, the effective retirement age should rise owing to the elimination of fiscal facilitation of pre-pension arrangements.”

The moves are part of a bid to offset the declining economy by tackling the Netherlands’ tight labour market.

To keep older workers in employment the measures include eliminating the favourable tax treatment of pre-pension arrangements and plans to reinstate the job-search requirement for those aged 57.5 years and over.

The ministry saw risks to economic recovery, which included a rise in wages. And it adds that labour costs could “be more pronounced owing to higher pension premiums resulting from low equity prices”.