PHILIPSBURG–Political authorities who leave office will no longer receive redundancy pay benefits for up to 24 months on a decreasing scale. They will now only receive for a maximum of 12 months and interim ministers are now excluded from receiving the benefit.
Ministers and Parliamentarians are entitled to a (monthly) benefit on termination of their service. This benefit is commonly known as redundancy pay (wachtgeld) and is covered by the national budget. In the past redundancy pay was granted for a minimum of one year and a maximum of two years.
The amount of redundancy pay gradually decreases over time, from 95 per cent of a political authority’s original salary in the first three months after leaving service to eventually 70 per cent. A specific procedure required by law must be followed to receive redundancy benefits.
The redundancy pay has been lowered from 24 to 12 months. The first three months political authorities will receive 95 per cent of their remuneration; the following seven months 85 per cent of their remuneration; and the following two months 70 per cent of their remuneration.
The change was approved as part of the amendment of the pension scheme for political authorities, which was passed by Members of Parliament (MPs) during the passing of the amendment of the 2020 budget on Tuesday, May 11. The law regulates both the redundancy pay as well as the pension for political authorities.
The passing of the amendment also puts into effect an increase of the pension age of political authorities from 60 to 65.
Finance Minister Ardwell Irion, who tabled the amendment during the handling of the amendment to the 2020 budget and the pension scheme for political authorities during a public meeting of Parliament on May 11, said there had been a lack of compliance with legal procedures related to redundancy pay and pension of political authorities. He said also that the legal basis for the payment of redundancy benefits was lacking.
The Ministry of Finance will also use the ordinance as a tool to implement an updated mechanism to better manage redundancy pay and implement a mandatory application procedure for former political authorities who are entitled to redundancy pay. Advances cannot be granted without a national decree. The internal organisation also has to be improved so that information regarding redundancy pay is always available.
The General Audit Chamber in September 2018 submitted to Parliament a report titled “Redundancy pay for political authorities: An investigation into the legitimacy of public expenditures regarding redundancy pay for former political authorities in 2017”. The General Audit Chamber reviewed several aspects of redundancy pay with the objective of determining the number of former political authorities entitled to redundancy pay in 2017, as well as the amount of public expenditure involved.
Among other things, the General Audit Chamber found that in practice, legal procedures are not followed in terms of the redundancy benefits. For example, with one exception, past advances were paid instead of benefits, without the required formal basis (National Decree).
As far as the Audit Chamber was able to verify, applications for redundancy pay were made to the Ministry of Finance since October 2014. Despite the lack of formal decision-making for granting redundancy benefits, advances were paid in lieu of the benefit under the responsibility of the Minister of Finance.
In view of its findings, the General Audit Chamber issued recommendations, the main one being the need to improve the internal administration so that information regarding the issuance of redundancy benefits is readily available. The information facilitates the legally required monitoring whether a beneficiary continues to meet eligibility requirements for the monthly payment.
The General Audit Chamber also, at the time, recommended amendment of the application procedure to include a minimum term of service of 180 days (about six months) as a political authority to be eligible for redundancy benefits.
The Chamber said that while its objective was to provide insight into public expenditures on redundancy pay in 2017, it had been unpleasantly surprised that the required information was unavailable, advances in lieu of benefits were paid without the proper legal basis, and the registration of these advances was “unreliable.”
The report is published in both English and Dutch and is available on the General Audit Chamber’s website