NETHERLANDS - Social affairs minister Piet Hein Donner has submitted his bill to parliament proposing a rise in the state pension (AOW) age from 65 to 67, despite criticism from the government's most senior advisory body, the Raad van State (RvS).

Whereas the government wants to reach its target retirement age through a one-year age rise in 2020 and then another in 2025, the RvS has recommended there should be an earlier start, in order to generate the necessary budget savings sooner.

However, Donner has argued this will have a limited effect on the state's finances.

In comments made responding to the RvS advice, the minister said a gradual rise in the AOW age would be complicated and expensive, and would also have a limited impact on the state's retirement funding.

The RvS had also suggested the AOW age should be linked with any rise in life expectancy.

But in Donner's opinion, the first rise of the AOW age must be introduced no sooner than 2020, as this would give workers and people in hard labour jobs sufficient time to prepare for the change.

The RvS said it was worried that the cabinet's proposals would increase tensions between older and younger workers, as people now over the age of 55 will still be entitled to claim their state pensions at 65.

So in a bid to increase intergenerational solidarity, the RvS argued the proportion of AOW financing to pay pensions should be raised from tax revenues, rather than from the increasingly deficient pay-as-you-go system currently deployed.

"Over 65s will have difficulty dealing with the effects of such a tax rise," remonstrated the social affairs minister, who added that a heavier tax burden will hamper the government's aim of keeping employees active for longer.

Part of the government's AOW proposal is to raise the retirement age for additional voluntary pensions in a single step to 67 in 2020.

The minister also stressed he cannot predict whether the proposed rise of the AOW age to 67 will be sufficient in the future to meet the budgetary needs of retirement planning.

However, some issues remain outstanding as the minister failed to address the RvS' request for a definition of ‘hard labour' roles, which are to be exempted from the AOW rise and will instead be referred to in additional legislation to be tabled in the near future.

The RvS has also urged the government to come up with additional financial figures illustrating the need for a rise of the AOW age.

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