PHILIPSBURG–The National Ordinance increasing old age pension AOV and the pension age to 65 years has been approved by Members of Parliament (MPs).
The MPs approved the draft National Ordinance with a vote of 14 for, and one against during an urgent public meeting on Wednesday afternoon.
The Minister of Public Health, Social Development and Labour VSA Richard Panneflek and his support staff were present to propose the changes to AOV legislation to Parliament.
In his opening remarks, the minister said that the change will significantly revise the AOV and widows, widowers and orphans pension benefit AWW making the system more sustainable, and will also increase the benefits received by pensioners.
“It is clear that the AOV benefit is still insufficient [on its own to – Ed.] supply a liveable income. That is why we (the cabinet of VSA) profoundly researched the financial implications on the increase in the benefit,” he stated.
Therefore, an update of the actual model used by the VSA ministry was necessary to estimate all financial consequences and find the maximum increase of the benefit without compromising the health of the fund.
He said that in recognising such, it was important to the ministry to ensure that the fund will remain sustainable, as the country is facing a rapidly aging population.
“The same large number of workers who grew our economy and funded our systems so well during the 90s and the 80s are now approaching retirement; therefore, with an increase [in the] aging population the projections are that a lot more money will be paid out of the fund in the next 10 years,” he added.
“While we are already in the final stages of these proposals, the introductions of [a] higher AOV age of 65 [years] – said by the Kingdom Council of Ministers as one of the conditions towards the further liquidity support for our country – has placed an extra urgency on this piece of legislation.”
In the proposal, the AOV age will increase from 62 to 65 with the exemption of persons who are already 60 or 61 years of age, the benefits for persons will increase by 11.11 per cent, resulting in an increase from NAf. 1,116 to NAf. 1,240 per month and the AOV premium wage limit will increase to NAf. 117,009 a year.
The minister noted that the changes to the AOV/AWW legislation are an important step, but at the same time just the next step in an ongoing process.
“In the coming years, the three main dimensions of the system age, benefit and premium will all be continuously evaluated because we will soon be confronted with the very sizable aging of the population,” he noted.
“Some of the most important AOV/AWW-related actions and questions for the months and years ahead are an awareness rising campaign to elucidate the consequences of the increase in age and benefits [and] research into the specifics of poverty and vulnerability among the elderly to [underpin] a more targeted approach,” he added
During the deliberations by MPs, several posed questions to the minister seeking further details and information about the proposed draft National Ordinance.
United Democrats (UD) MP Sarah Wescot-Williams asked the minister to indicate on what basis the legal minimum reserve was established. According to Panneflek, the national decree stipulates that the reserve should have between 50 and 70 per cent of the average cost that is paid out of the fund over a five-year period.
The MP further asked, “Can the minister give a projection since we are now at 2028, when the surpluses would start to decrease? Can the minister provide a picture as of 2028, how that decrease will look? Where would we stand with the reserves and surpluses?”
In his response Panneflek said that the annual income and expenses of the reserves will break even in 2028. At that time, the reserve will have a maximum of NAf. 558,000,000, after 2028 the reserve will decrease every year, and it is projected to deplete completely by the year 2038.
During his deliberations, National Alliance (NA) MP Christophe Emmanuel asked for the minister’s opinion on the Dutch government’s recent request to raise the pension age to 67 years. In his response the minister said, “At this moment we only consider the age increase to 65, before we complete any further age increase, we need to consider not only the health of the AOV, but also the general well-being of the elderly.”
The MP further asked the minister to share the study or analysis used by government to determine that NAf. 124 for pensioners would be sufficient. According to Panneflek, the ministry does not necessarily consider the NAf.124-amount increase as satisfactory, but shared that the current amount is the maximum increase the ministry could afford at this time.
During the second round of deliberations MP Emmanuel made it clear that he did not support the draft proposal to increase the AOV age. He stated, “We are where we are today because of the failed investments and the bad investments. Every time you have a failed investment and the pension fund [is] in trouble the solution is raise the age.“We need to deal with the cause and the root of the problem that we have today. And the root of the problem is the failed investments and millions of guilders that have been funnelled out of APS in those investments.
United People (UP) Party MP Omar Ottley in his motivation remarks for his vote stated his support of the proposal hoping that government will commit to “do what it needs to do”.
“If the people permit me to be here in 2028 and [government] has not done anything to rectify this situation, I will not be voting to extend [the] pension [any] higher,” he said.
After voting via roll call, 14 MPs voted for, and one against the approval of the legislation. MP Emmanuel was the only MP to vote against the proposal.