AMSTERDAM — Marking a reversal of earlier austerity plans, the Cabinet will permit early retirement by allowing workers to bow out of the workforce at the age of 63 and scrap a plan to hit people taking early retirment with a lump sum tax demand.

Social Affairs State Secretary Mark Rutte has confirmed in a letter to unions and employers that the government will allow workers to build up an early pension via a special levensloopregeling savings plan.

The coalition cabinet parties had agreed in the government accord last year that in future everyone will be forced to work until the age of 65 to counteract the effects of an aging population.

It wants to discourage people from availing of the pre-pension scheme by scrapping the tax deductibility of premiums and has not yielded on this intention, public news service NOS reported on Wednesday.

But the Cabinet had resolved to implement a special savings plan in which workers can save for all types of leave. The Cabinet’s original plan meant that the savings scheme could not be used for a full-time pre-pension, but could only be used for a part-time pre-pension.

Under pressure from unions and employers — who demanded government economising concessions after agreeing to a two-year wage freeze late last year — the Cabinet has since eased its intentions to allow the savings scheme to be used for a full-time pre-pension.

According to the regulations of levensloopregeling, a worker can save an annual 12 percent of their income to give a maximum pre-pension of 2.1 years. This means that workers can stop working shortly before their 63rd birthday.

The Cabinet has also abandoned its plan to restrict the building up of a pension with fiscal support to a maximum of 70 percent of the last income, the normal pension level. So whoever wants to save more, will thus be allowed to do so.

The Cabinet also decided that it will allow workers who are employed in physically heavy jobs to retire before their 65th birthday.

As previously reported, the cabinet has also scrapped plans to charge people who make use of the VUT early retirement scheme a lump sum tax figure.

Had the plan gone ahead, workers would thus have been required to pay the tax that would have been charged over the full-term of the VUT scheme in one payment.

State Secretary Rutte said the cabinet was still puzzling over how it could earn the funds it had budgeted for in its plans to tighten the nation’s early retirement schemes.

[Copyright Expatica News 2004]

Subject: Dutch news