We can no longer avoid it, everyone has to work longer for their pension. The current AOW system is no longer affordable and must therefore be overhauled. Since 1956, elderly people have enjoyed their pension from the age of 65, but that system now appears to be outdated. How will the retirement age be adjusted until 2023 and how will continuing to work develop after that?
Work longer for retirement
- Introduction of AOW
- Unaffordability and continuing to work
- 2019 to 66 years
- 2023 to 67 years
- Working longer for retirement and demographic growth
Introduction of AOW
After the Second World War there was a lot of poverty and dissatisfaction, which led to people wanting more and more rights as workers. It is clear that one has to work for the money , but the human body is not designed to keep going until the end. That is why the General Old Age Act (successor to the Emergency Old Age Provision Act of 1947) was introduced in 1956 under Minister Drees, which established that:
- Everyone who has reached the age of 65 is entitled to an AOW benefit. In other words, anyone can actually stop working at that age, or can be fired at that age without consequences;
- 2% AOW is accrued for every year worked. This may mean that some people have not collected a full pension and are therefore entitled to part of the state pension.
Based on these two principles, everyone could stop working as soon as retirement age is reached .
Unaffordability and continuing to work
After the Second World War there was a big baby boom, which gradually allowed more and more people to start working in the Netherlands. Favorable circumstances for the government, because the ratio of pensioners to the number of workers was good. Because in recent decades people are having fewer children later and therefore relatively fewer people are entering the labor market, while the baby boom generation is retiring, this ratio has become unfavourable. In addition, the elderly are getting older due to improved healthcare. In other words, fewer workers must yield more pensions. This uneven growth has made the pension system unaffordable, which is why it was decided in 2012 to actually do something about it by making it mandatory to work longer.
2019 to 66 years
It is of course not applicable that the age is increased by two years in one go. To this end, a transition period has been introduced so that it is gradually increased. The goal is to have two years added by 2023. In 2019, people must work until the age of 66 and this is achieved by:
- 2013, 2014, 2015 to increase the retirement age by one month;
- 2016, 2017, 2018 to increase the retirement age by two months per year;
- 2019 to increase this by three months.
2023 to 67 years
From 2019, the retirement age will therefore be increased at an additional accelerated pace. Over the last four years up to and including 2023, the age will increase by three months per year, so that people will have to work until the age of 67 in 2023. This means that relatively more people remain recognized, so that the pension system remains more affordable. But what about after 2023?
Working longer for retirement and demographic growth
The development of the relationship between pensioners and workers is very much related to demographic development. In fact, this is the annual growth and decline of the population composition. The number of people who work compared to the number of people who are old is now declining unfavorably, which puts affordability at risk. This also means that after 2023 the age can be adjusted to the actual coverage. This may mean that we may have to work until the age of 68 or 69 by 2030 in order to keep the state pension affordable now and in the future.
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