The elderly are angry about the amount of their state pension and pension. But just increasing it causes problems, says Herman Kappelle, professor of Fiscal Pension Law: “If you start spending more, working young people will pay for it.”
No increase in the state pension for more than 10 years, it really bothers the elderly. To make their frustration clear, demonstrated she is in Utrecht today for a higher state pension and pension.
Rules offer certainty
“I can understand that you are angry if there has been no increase or even reductions for 10 to 12 years,” says tax specialist and endowed professor of Tax Pension Law Herman Kappelle. “But this is inherent in the system.”
“We have good pension funds, it offers security for all generations.” But Kappelle points out that we derive that security from a pension system with certain rules. Deviating from it could jeopardize it. “Apparently there has been too much uncertainty for a while to spend more,” he says.
Coverage
For example, the funding ratio must be up to standard: the pension funds must have sufficient cash in hand. According to various interest groups demonstrating for a higher pension, those rules are far too strict.
In 2021, the House of Representatives adopted a motion from the PvdA, which stipulated that the funding ratio of the pension funds could fall from 110 to 105 percent. The bottom line is that pension funds need to have less cash in hand to still increase the benefit.
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No benefit from relaxation
Retirees have not yet benefited from this relaxation, but that is logical according to Kappelle: “This relaxation will only take effect as of 2023 and with retroactive effect, funds may still increase the pensions of 2022.”
“It’s a matter of waiting, but even if they have enough money in cash, the question is whether they will actually do that. I hear varying reactions from pension funds about this. People also want to save for the transition to the new system. from Koolmees.”
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Extend the minimum wage increase
The protesters also want the state pension to be increased. Normally this happens every six months. As with the minimum wage, this increase depends on the average wage increase.
Apart from this usual increase, the government has raised the minimum wage once by 7.5 percent to make working for that salary more attractive. Now retirees, together with the SP, are demanding that this one-off increase also apply to the AOW.
AOW and poverty according to the CBS
According to Statistics Netherlands, ‘the poverty risk of AOW households followed a different pattern than average’ and ‘in the first decade of this century the state pension was structurally above the level of the low-income threshold’. The result is that the percentage of AOW households at risk of poverty is considerably lower than the national average. According to Statistics Netherlands, the poverty risk in the Netherlands is also ‘low and below the European average’ compared to other countries.
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‘Smart frame from SP’
Herman Kappelle does not think this requirement is justified: “Although this incidental increase in the minimum wage is not made for the AOW pensioners, the link between the minimum wage and AOW continues to exist.”
The bottom line is that the increase does not make any difference to the clutch, explains Kapelle. “So the state pension is simply indexed with wage inflation, as always,” he explains. “It is not tampered with. That is cleverly framed by the SP.”
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Increase in state pension ‘at the expense of Jan Modaal’
In addition, a sudden increase in the AOW would have an unfavorable effect, according to the professor of pension law. “If you also increase the AOW by 7.5 percent, that has a very unpleasant consequence for everyone who is not on that minimum wage. in his pension accrual is deteriorating.”
“When you accrue pension during your working life, account is taken of the fact that you will also receive AOW later on. Part of your salary is not included in your pension accrual, because it is assumed that you will also receive AOW. so that part goes up too,” he warns. “Then the part of your salary on which you accrue pension will go down. That is an effect I hear too little about.”
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