The coalition government and three opposition parties on Wednesday finalised their agreement on pension reform, ensuring the plans will have majority support in the senate.

The reforms centre on cutting the amount workers can save tax free towards a pension from 2.25% to 1.85% of their annual salary.

The cabinet had wanted to reduce the tax break to 1.75% of salary but opposition parties said this would have a serious impact on pensioner spending power and make it impossible for young people to build up a proper pension.

Bonuses

The changes will cut the amount the cabinet hoped to save by €600m. This will be compensated for by limiting the bonus for companies who take on older workers to the over 56s and the introduction of value-added tax liabilities for pension funds.

The agreement also includes setting up a special pension fund for the self-employed.

The aim of the combined package is to generate €3bn and is central to the cabinet’s €6bn austerity package.

Unions

The big Dutch unions said on Wednesday they are unhappy with the agreement.

‘The cabinet is more concerned with book-keeping than investing in the future of our youngsters,’ a spokesman for the FNV trade union federation is quoted as saying. ‘They will also be hard hit by the revised plans.’

Youngsters who work for 40 years will build up a pension worth 16% less than people retiring now were able to do, CNV chairman Maurice Limmen told news agency ANP.