AOW age and ABP pension

Now that the state pension is being accelerated to age 67, many civil servants are wondering whether they will run into problems with their APB pension, especially people with early retirement.

State pension age phased to 67 years

The age at which citizens are entitled to an AOW benefit will be increased more rapidly from 2013 from 65 to ultimately 67. This increase in the state pension age is necessary because the aging population is increasing the number of benefit recipients, while there are proportionally fewer workers who have to pay the state pension.

What is meant by the AOW gap?

The gradual increase in the state pension age from 65 to 67 may leave people without income for one or more months. We call that effect the AOW gap. This refers to the period that elapses between the moment one turns 65 and the moment one receives the first AOW payment.

Who will be affected by the AOW gap?

Approximately 70,000 Dutch people will already be faced with the AOW gap in 2013. In fact, that number would be much higher, but many of them still have jobs and could choose to work a little longer, provided their collective labor agreement allows it. Because these collective labor agreements often still assume the traditional dismissal at the age of 65. And many benefit recipients are among the people who could also be confronted with the state pension gap in 2013. This category will not be affected by the phased increase in the state pension age because their benefits (WW, WAO or WIA) will continue until they receive their first state pension payment. And finally, there is the category that is in a so-called early retirement scheme and who may therefore run out of money if their company pension is transferred together with the AOW. After all, early retirement stops at age 65 and after that you receive nothing for a while until the AOW pension is paid out.

What does the increase in the state pension age mean for the ABP pension?

Although the ABP (General Civil Pension Fund) pension scheme is separate from the AOW (implemented by the Social Insurance Bank), the so-called AOW gap could also create a problem for ABP pensioners. Whether this will actually happen is still up for debate. Consultations are taking place between trade unions and employer organizations as to whether, and if so how, the proposed increase in the state pension age should be reflected in the ABP pension scheme. However, it has already been agreed that the bridging in the context of the ABP optional pension will continue for longer. Whether this extension will also apply to insured persons with an FPU benefit (Functional Pension Benefit) or a military pension remains to be determined.

What is ABP optional pension?

ABP pensioners already had the option to choose when they wanted their pension to commence, provided that the commencement date was between the ages of 60 and 70. Insured people who were not yet eligible for an AOW benefit could in this way compensate for the lack of income. Previously, this was until the age of 65, but the trade unions and employers have now agreed to continue this option until the new state pension age. Naturally, the benefit amounts will be slightly lower for the rest of their lives.

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